Recruitment Process

It is important to adopt a systematic and deliberate process when addressing board formation. The main steps are outlined below. These can be adapted to either an electoral or an appointment process. Some sectors will be more suited to appointed roles, although many elected positions are now also widely advertised and open to self-nomination. Times are indicative only.

The key steps can be divided into three phases:

Phase one: Needs assessment

1, Confirm the number of director positions to be filled (Month 1)

2. Confirm the board’s role, structure and work programme (Month 2/3)

The board should confirm its structure, role and focus before a recruitment process

is started. In some cases, this may require consultation with members, funders, sponsors or other interested parties. High-calibre candidates will be interested in the expectations stakeholders have of the board and the extent to which the board will be empowered to govern.

The board should identify the key strategic challenges facing the organisation over the next three to five years (the realistic term of appointment of any new directors) and any other governance matters about which candidates should be aware (e.g. contingencies that may affect directors’ liabilities) before accepting appointment.

3. Create a ‘needs matrix’ (Month 2/3)

This process is identified as a separate step but may be run in conjunction with step 2 (above). Given a shared view about the challenges facing the organisation, existing directors are invited to comment on the skills, experience and attributes they feel the board as a whole requires. They would next be invited to identify relative strengths and weaknesses by assessing the present board against those requirements.

Provided there is a genuine commitment to openness and the board is comfortable with an honest approach, both tasks can be completed through general board discussion. An independent survey to gauge views anonymously is useful where open discussion may be difficult. It may also be useful to invest in an independently facilitated discussion of the survey results.

4. Finalise a recruitment profile for each available position (Month 3)

It should be possible at this point to agree on a profile against which the recruitment process can start. In some organisations the board can control the process throughout. In others, the following steps may be out of the board’s hands. This may be the case where new directors are to be elected without any vetting process or if an electoral college (e.g. council) has a tendency to appoint without reference to the board. In these situations a board may view steps 1-3 as a waste of time. Even then, however, a board should be able to articulate its strengths and weaknesses.

Even in an electoral process the board must communicate the challenges and needs of the organisation clearly and in advance.

Electors often look for information to help them make an informed choice. This approach will be negated if there is any sense it is prompted by self-interest or a desire to stack the board.

Phase two: Recruitment

5. Identify suitable candidates (Month 3/4)

In many organisations there are traditional avenues for obtaining new directors. However, these are increasingly viewed as relying on personal contacts and existing directors’ affiliations, unlike a diligent process that will identify the best candidates for the job.

Take as much care in appointing new directors as in recruiting a new chief executive.

The process may therefore involve advertising and possibly a professional search. Whichever approach is adopted, the aim is to attract a range of well-qualified candidates from which to produce a shortlist for final selection.

The www.appointbetterboards.co.nz platform is available to the sector to post positions and manage the recruitment process.

6. Shortlisting of potential directors (Month 4)

A democratic election for new directors has its own dynamic. However, where a selection process is involved, applicants can be assessed against the recruitment profile and discussions held with both potential candidates and their referees as appropriate. The ideal is to reduce the list of possible contenders to a medium shortlist, from which a final group of candidates can be selected for interviewing. Responsibility for the various stages of this process, including shortlisting, should be clearly defined early on. This is often allocated to an appropriate board committee (perhaps the board’s Nominations or Corporate Governance Committee if it has one). It should also be expected that competent external candidates will undertake due diligence on the organisation and the board itself. This takes time but should be encouraged as it increases the likelihood of a successful appointment.

7. Final selection (Month 5)

The selection panel interviews a final group of candidates to decide who should be offered a directorship. If this phase has been conducted by a committee to date, a final decision may not be within its mandate and would require full board agreement. The timeline should take this into account.

8. Appointment and orientation (Month 5)

The final stage is to ensure appointees (or those elected) have clear role and performance expectations, and terms of appointment. Typically, the chair handles this part of the process.

It is vital that candidates are clear about the organisational challenges and the contribution they are expected to make to the organisation.

A position description and a letter of commitment are helpful in outlining the desired relationship.

A lack of clarity about expectations at this stage may lead to patchy performance among directors. It is better that someone makes it clear now rather than later that they cannot commit the time and energy.

This step would also define an orientation process to ensure each new director can contribute quickly.

Changing even one member changes the overall dynamic of a board. This can mean re-assessing how the board will work together in the future.

Phase three: Succession planning

Successfully filling vacancies is not the end of the process. An effective board maintains a watch on its performance and composition. One never knows when a new appointment may become necessary. Three further steps can be identified, as follows.

9. Review the board’s performance and composition

An organisation’s circumstances and needs change over time. Changes at a board level are often needed to reflect these changes. The board should consciously identify and track the need for board-level changes. This should include a regular review of the board’s performance, both collectively and individually. Board performance evaluation is described further in Step 8 on page 133.

10. Maintain the needs matrix and a current director profile

The needs matrix must be updated regularly (at least annually, if not more frequently in rapidly changing environments). The ideal time is following or during a board and director performance assessment. As described in step 3 of this chapter it is important for existing directors to have shared views about the challenges facing the organisation and the skills, experience and attributes the board as a whole requires. The board can then maintain an up-to-date assessment of how well its present composition fulfils emerging requirements and what new skills or experience are required should a new director be sought.

11. Maintain a list of prospective directors

With those needs in mind, the board can remain alert for individuals who might be a good match.

Board appointment panels

In all parts of the not-for-profit sector it is increasingly common to find boards using specialist appointment panels to assist with the director election and appointment process.

Where the organisation’s constitution allows, such panels commonly comprise board members and specialist outsiders who bring a particular perspective or set of skills to the process, notably governance expertise. Appointment panels will interview and appoint one or more independent directors and recommend a shortlist of best-fit candidates seeking directorial roles through the election process.

The composition of the board appointment panel might be detailed in the constitution or might be in the form of a board policy or bylaw.

A sample set of boardroom competencies for directors, together with a role definition for a director, is available in the online resources.