|When your board needs a director who's a special fit (December 2008)|
Where do you go for new board members when the local candidate pool doesn’t offer anyone with the right skills? Today new internet sources join traditional methods for hunting good matches.
If local candidates won’t suffice, several services can help find who you need
For many community banks, all the directors they’ll ever want or need can be found right in town.
Kaplan says there are other goals beyond SOX.
“When you see boards reach outside for new directors, they are looking for a particular skill set,” says Kaplan.
Sometimes when banks pass some threshold—e.g., $1 billion in assets—the board’s role begins evolving and directors feel the need for talent that can’t be found locally. Kaplan says two common types he’s engaged for are IT and marketing experts. (On occasion, regulators may order a bank to beef up its board with skills that current directors lack.)
Where can bankers and their boards’ nominating committees find such new blood of the right types? Some work their own contacts, but others seek out firms like Kaplan’s. (He charges fees based on a multiple of the board fees that will be earned by the prospective director.)
Besides these choices, there are relatively new services accessed in part or completely through the web. We examined three.
One caveat: Choosing a director over the internet is not like buying a book.
“You don’t get them in two days with free shipping,” quips Peter Gleason of the National Association of Corporate Directors.
NACD Directors Registry
Directors Registry, available from NACD, at www.nacdonline.org/registry, is an outgrowth of the organization’s old director recruitment database, says Gleason, NACD managing director and CFO.
“We have many members which are small and midsized companies, and they just don’t have the resources to pay the search fees to find directors,” says Gleason. For a time the old database served well enough, but Gleason says the current governance environment is driving increased demand for new faces on the board.
NACD research finds that directors are serving on fewer boards than before, as the time and work demands increased. In addition, directors are tending to cut their service shorter. Directors typically served a decade, on average, says Gleason. Now, they average about eight years.
Gleason says the registry, opened up to searches for candidates in May 2008, currently contains about 2,500 prospective directors. About two-thirds have public company experience, and many have financial company background.
While the search process begins online with the client’s entry of essential search criteria, interaction with the actual database is handled by an NACD representative, a retired search professional, according to Gleason. In this way the company looking for a new director with particular skills can obtain assistance in refining its search and then pick up the process once potential candidates have been found.
Clients receive a short list of candidates first, without names. Those showing the most promising lineup with criteria are asked for consent for release of their detailed resumes. Arrangements for interviews and anything from that point on are up to the client.
Costs: The initial database search and refined searching cost $2,500, discounted to $1,000 for NACD corporate board members. If a successful match joins the company’s board, a contingency fee applies. This runs $15,000 for nonmembers, $13,500 for NACD individual director members, and $10,000 for NACD corporate board members.
NASDAQ OMX’ Board Recruiting
Board Recruiting is a profile-matching system with associated live search consulting availability, offered by The NASDAQ OMX Group, parent company of the NASDAQ trading system. It went live in June 2007.
Board Recruiting also evolved out of informal networking that NASDAQ representatives facilitated. Today’s web-accessed database contains approximately 3,000 profiles of prospective directors.
“Some equate this to a dating service for board members,” says Bruce Aust, executive vice-president in NASDAQ OMX’ Corporate Client Group.
Companies registering to use the database can search for potential directors using numerous criteria, including types of skills, years of experience, types of experience, education level, types of board committees they’ve served on, and more.
A company need not be NASDAQ-traded, or even a public company, in order to use the service.
The search produces a list of matching candidates, and the company can review the basic details of those candidates. The system allows the company to anonymously send a message of interest. If that is accepted, the two parties can view each other’s basic contact information and decide whether to move forward.
A special feature of the service is the ability, available since September, to also pick and choose among related recruiting aids and services from the Heidrick & Struggles search firm.
Costs: There is no charge to search the database. Placing a candidate on a board costs $25,000, using solely the database service. Use of Heidrick & Struggles comes at additional cost.
Deluxe Corp.’s PartnerUp
PartnerUp, recently acquired by Deluxe Corp., is a business networking site that, among other purposes, enables companies looking for directors to do some searching by expertise and interest in joining a board.
There are approximately 21,000 people listed in entire database, with a little over 4,000 listing both an interest in serving on boards of directors and in banking, mortgage lending, or financial services, according to Steve Nielsen, president and CEO of PartnerUp.
Costs: While basic, free membership is available, you can only conduct searches if you join, at $24.99 per month. BJ
The electronic version of this article available at: http://lb.ec2.nxtbook.com/nxtbooks/sb/ababj1208/index.php?startid=20
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