Apr 9 2014
Everybody’s doing it.
But, when it comes to getting a board seat, is it actually working?
Ever since 1985, when trade association executive Bill Lewis advocated “networking” to describe how to broaden customer bases,[i] this appealing verb has dominated the work world—and boardrooms. The modern mind was primed for it. Business leaders had already begun visualizing technology and transportation systems as “networks,” and by the 20th century “personal networks” were also entering social consciousness.
The rise of the personal networking concept had an almost immediate impact in the boardroom. Robert K. Mueller, then Chairman of the National Association of Corporate Directors (NACD) and of the consulting firm Arthur D. Little, wrote about it in Corporate Networking: Building Channels of Communication (New York, Free Press: 1986).
When Corporate Networking rolled off the presses, NACD was less than a decade old and had only a few hundred members. Today, NACD members number more than 14,000—all of them board directors. The growth of our association, and the success of our members in finding board seats, shows the tremendous power of personal networking. Meanwhile in the past decade alone, the rise of professional networking sites like LinkedIn and the entire social media phenomenon—from Twitter to Klout—has leveraged the power this power to the nth degree for large-scale connections. But as powerful as networking has been as a broad social force, the question for aspiring directors remains: can it get me into a boardroom?
The question is important, especially for those seeking a public company board seat, a goal that is both desirable and difficult. It is comparatively easy to get on a nonprofit board, as long as one has a sterling reputation. Being a donor can help, too. It is also fairly easy to land a seat on a small private company board as long as one is not too insistent on receiving a large cash retainer; the typical compensation is stock and/or a small cash retainer. But obtaining a board seat at a public company – which can be so appealing both professionally and financially – can seem impossible. Since there are only about 15,000 public companies, and only about half of them replace a board director in any given year, the throngs of qualified aspirants are competing for only about 7,500 opportunities per year.
What NACD Research Says
The good news is that personal networking is indeed the key to board seats—even on sought-after public company boards. The bad news is that it starts on the side of the board, not on the side of the candidate. It is a fact that board members find directors through networking; however, we have no evidence that directors find boards in the same way.
Personal networking remains a dominant channel for boards that are searching for directors, whether for public, private, or nonprofit boards. (See chart: How Do Boards Find Directors?) In nonprofits, the “personal network” approach is reported by four out of five boards. In for-profit boards, both public and private, prevalence is slightly lower – about two in three. Interestingly only one other approach is used heavily – by nearly half of private companies and by a majority of public companies and nonprofits, and that is “nominee identification by a committee.”
Other techniques that board directors cite in finding new directors include stakeholder or shareholder suggestions, use of a search firm, and the use of a board director data base such as the Diverse Director DataSource (3D) or NACD’s Directors Registry.
A Closer Look
Based on all these findings—especially the findings about personal networking and nominee identification by a committee—you might think that all you need to do is go out and network, and leave it at that; but this is incorrect.
First, there is clearly a difference between getting found by “networking,” which is about knowing people personally, and getting found by a “board committee,” which is about building a reputation. These are two different things.
Getting found by networking refers to real person-to-person knowledge; the kind that comes mainly from working together – whether in a fox hole, a charity drive, a political campaign, or a corporate initiative. It can also be found through association connections, which aspiring board directors can make by regularly attending chapter meetings of NACD or a relevant industry association. True, it’s unlikely that your friend or colleague will be the one recruiting you to his or her board; the closer you are to him or her, the more this might be perceived as too chummy—the legendary “cronyism” frowned on in good governance. But that person may be part of the person-to-person networking chain. You know somebody who knows somebody who knows somebody who is looking—and you will be found and vetted through the chain. So if in real life real time you know someone who gets contacted by a board member, chances are that if you fit the profile you will be contacted. LinkedIn contacts, Facebook friends, and Twitter followers have nothing to do with this kind of networking; thinking otherwise may be delusional.
Getting found by a board committee is a whole other matter. Here social media networking does help. To be identified by a board committee in a way independent of personal networking means that you have held a position that suggests that you may be qualified for the board seat—and that someone finds you. Here your internet presence—including a social media presence which is so useless for true personal networking—really can make a difference, whether positive or negative. It’s also a good idea to let recruiting firms know about you, and to put your resume in board director data bases as listed above. After all that happens, personal networks still come into play because directors want to hear from real people who really know what kind of person you really are. In other words, your future board may find you through a social network and then check you out through a personal network.
Moral of the Story
So network away. Make friends and influence people. Let friends and colleagues know one-on-one over coffee or a meal or an NACD chapter event that you are looking for a board seat. It can’t do any harm and it can do some good. If you are a good person who does good things, the people you know will know this and will think of you when the time comes if they are searching or helping a search.
But don’t rely on personal networking alone. It is too far away from opportunities, which are literally far and few between. You need to focus on reputation management too—to “get found” by those board committees seeking to move beyond their networks. Especially if you are seeking a board seat on a public company board, make sure that your credentials appear—from Director Registries to the latest Twitter feed—in all the places where boards might be looking.