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Having been CEO or senior manager with experience in transformation processes: essential for joining the board
Senior manager or chief executive with experience in transformation processes, particularly corporate change in digital and technological fields. This is the profile of most of the directors who join a board of directors in Spain according to the study ‘Managing the move from director to board member' published by the Esade Centre of Corporate Governance in conjunction with Antonio Núñez, senior partner at Parangon Partners, featuring a survey of more than two thousand professionals. This report analyses the critical factors in managing the move from director to board member smoothly and pinpoints the main challenges along the way.
According to Mario Lara, director of the Esade Centre of Corporate Governance and co-author of the report, “whilst the move from director to board member is an opportunity to continue contributing to a company’s success, it also means accepting new challenges related to the personal development of both knowledge and skills that facilitate dealing with the new position, and likewise a different mindset regarding the responsibilities that come with joining the board.”
“Executives and board members play different roles because they are involved in different stages of the business process. Directors may have been more involved in the company’s everyday management and then have a more strategic, long-term outlook as a board member”, added Antonio Núñez, senior partner at Parangon Partners and co-author of the study.
The report also confirms the tendency for more and more women to focus their career on becoming board members. According to the authors, this is a reflection of the maturity and evolution of the Spanish market. The study also underlines that the age of persons joining a board for the first time is falling, with more than one third of new directors aged under 50 and just 7% over 60. One contributing factor is that, besides more women becoming board members, companies and particularly listed companies, are specifying in their in-house regulations the number of additional boards that their directors are allowed to join in order to avoid board member burn-out.
Another of the study’s main findings is that the best way to facilitate or accelerate this transition is to manage one’s personal networking well; to build a good story around one’s career experience; to gather essential knowledge about the board; to develop contacts to gain support from influential board members; and to learn new corporate governance standards.
Pole position in the race towards the board
According to the report by the Esade Centre of Corporate Governance, the professional careers that help directors become board members are having belonged to senior management (19%), experience in business transformation processes (18.4%) and having been a chief executive (17.9%) and, as regards the best paths, those surveyed mentioned the recommendations of investors and shareholders (32.2%), of board members or chairperson (29.5%), or of the CEO or senior management (18%). Executive search companies gain importance in the case of female directors who become board members (21.4%) and executives joining a board for the first time (12.3%).
The fields of knowledge highlighted are those related to strategy, knowledge of the sector or industry, and risk management. Knowledge of people management, however, is not a priority and this, according to the authors of the report, shows that issues related to talent management are still undervalued.
Important factors related to skills and competencies include particularly integrity and trust of shareholders and stakeholders, and a judicious contribution to the board and the executive team in order to be able to take difficult actions and decisions. Another highly valued asset is having an informed opinion and panoramic vision of the company, the business, the markets and its environment in complex scenarios.
External factors that may – or may not – facilitate the process
The move from senior executive to board member also involves external factors that may facilitate this transition, such as being introduced by one’s company as a board member in a subsidiary or invested company; or one’s candidacy being recommended or mentioned for other boards directly, or through headhunters or other agents; or being introduced as a trustee of a foundation or the board of an association on their behalf. But there are obstacles too, in which regard the main reasons why directors refuse to join a board are incompatibilities with the company’s values, purposes and interests (28.5%), or with the strategic goals and outlook of its main shareholders (13.4%), in addition to other external circumstances, such as any reputational risk vis-à-vis key stakeholders, society or the environment (10.8%).
“The move from manager to director must be assessed as a multi-dimensional challenge in which factors such as previous experience, facilitators, competencies, abilities and intangible resources are essential for enabling an appropriate transition,” explained Néstor U. Salcedo, a researcher at the Esade Centre of Corporate Governance and co-author of the report.