Historically, onboarding new directors has entailed a large stack of reading material, which contains everything they’d need to know about the company, financials, board structure and governance. This method served its purpose in decades past when new members of the board were more than likely to be current or previous CEOs, CFOs, or sitting on boards of other companies.
Today, the backstory of new directors is becoming far more diverse. According to the Spencer Stuart Board Index, 45% of all new S&P 500 directors in 2017 were ‘first-time directors’, meaning they joined their first public corporate board — a percentage that’s climbing rapidly (up from 32% in 2016 and 26% in 2015).
“Not only is this group of first-time directors more diverse,” said Julie Daum, Leader of Spencer Stuart’s North American Board Practice, “but they’re more likely to be actively employed at a growth stage of their career; more likely to have a background in tech or telecommunications; and less likely to be a C-suite executive.”
Often possessing high-demand skill sets (e.g., digital transformation, cybersecurity, ecommerce), the next generation has a significant opportunity to contribute in today’s boardrooms – but they also face several challenges.
Onboarding was one such challenge discussed at the Next Gen Board Leaders Summit earlier this month. A group of 15 public-company directors in their 30s and 40s met at Wilson Sonsini Goodrich & Rosati’s Palo Alto campus to discuss a docket of corporate governance topics with a generational lens.
“This is a group that’s hungry for knowledge,” said TK Kerstetter, CEO of Boardroom Resources and Host of Inside America’s Boardrooms. “Many of them are the youngest members on their board by 20+ years. They have a lot of good ideas about how onboarding processes can be improved, and I think boards would be wise to listen.”
Next Gen Board Leaders was established in 2017 by Boardroom Resources and Spencer Stuart (now also joined by Diligent) and was designed to highlight the challenges, opportunities and contributions of a younger generation in today’s boardrooms. Members of the community serve on a range of public corporate boards including NETGEAR, Gannett, Kimberly-Clark, WWE, The Coca-Cola Company, Morningstar, Dun & Bradstreet, AutoNation, Chipotle Mexican Grill, and Ally Financial.
In June, the Next Gen Board Leaders Advisory Council will reconvene in New York City, where they plan to transform the community’s discussion points into a set of recommended best practices that today’s boards can use to improve their onboarding processes. Below, we outline just a few high-level themes from the event discussions earlier this month.
Board Guidance for Better Onboarding
My technical onboarding process was thorough (e.g., board book, on-site meetings), but those things didn’t necessarily help me find my voice in the boardroom.
Acknowledge diversity in ‘phase of life’. Overwhelmingly, members of the Next Gen Board Leaders community have families with young children. They spend their mornings packing school lunches before going off to manage the business units at today’s top companies. From both a personal and career perspective, next-gen directors are at a different phase of life than the majority of today’s board members (average age: 63.1 years old, Spencer Stuart Board Index). This is a type of diversity that’s rarely acknowledged, yet it can pose several challenges from socializing to scheduling.
I had the experience of being pregnant while serving on the board. That was certainly a first for my fellow board members.
Determine ownership. We know all too well that if ownership is not assigned, a task (like onboarding) is less likely to get completed – much less measured, tweaked and improved over time. Who’s ultimately responsible for onboarding new directors to today’s boardrooms? What is the role of the corporate secretary? This group felt that the responsibility should fall to the board chairman, lead director, or Nom/Gov committee chair; regardless, today’s boards should have the discussion and decide. Just because ownership falls to an individual or a committee doesn’t mean that aspects of onboarding can’t be delegated — nor that they have to be time-consuming (e.g., grabbing lunch, assigning a mentor).
My onboarding needs were more confidence-based than they were skills-based.
Learn from other boards. No board has the ‘complete onboarding solution’, but many boards are doing positive things that should be shared. One Next Gen director, who joined the board of a fast-casual food chain, spent two days working in the restaurant’s kitchen, an onboarding experience he said was educational, humbling, and an excellent opportunity to bond with fellow new directors. Another Next Gen board member said her board implemented an onboarding curriculum, which entailed a series of scheduled presentations and management meetings spread over the course of a year; she found the process to be thorough, and she identified a charismatic lead director as the key to its success.
My board takes an international trip together every year. As a new director, it was predictably a great way to build a rapport with the other board members.
This community looks forward to outlining a comprehensive set of onboarding guidelines in June. Not only will the Next Gen Advisory Council be making suggestion for boards, but they’ll be providing guidance for new and aspiring directors in a “What I wish I had known” or “What I wish I had done” format.
We believe this community is serving an important purpose, and we can’t wait to watch it grow!
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