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OPTIONS FOR BOARD TALENT: a
review of tapping into the Board’s network, using Board Talent Banks, and
using Retained Search.
There are three ways of going about finding talent. Each has different cost/time commitment/risk components.
LOOK AT PROSPECTIVE CANDIDATES IN OUR NETWORK.
Tapping into the Board’s collective network is always a good first step. It is inexpensive. But it has downsides.
One downside is that this process of talent selection becomes inappropriately self-sealing and dysfunctional. How many of us have been on Boards where a powerful and respected Board member nominates a friend of a friend. The default position for the rest of the Board is to say, “Great idea.”
Another downside is that the talent tail begins to drive the talent dog. Instead of first thinking about what skills does the Board need over the next 36 months to fulfill its fiduciary mission, the focuses of discussion becomes whether the friend of a friend would be a good fit with the Board.
In the absence of a planful, thoughtful approach to thinking about talent issues, the Board is likely to select someone with a high personal comfort index. In doing this, the Board may perpetuate the Board’s strengths and weaknesses to the detriment of its mission.
In the event of litigation, the question may be asked, “Where did you get this Board member?” Is it an appropriate response to your Board obligation of “duty of care” to state “This person was a friend of a friend of a powerful member of our Board and we felt comfortable with this individual.”
AUGMENT THE BOARDS NETWORK WITH A BOARD TALENT BANK.
A Board is likely to make a better decision if there is a valid pool of candidates to evaluate rather than one or two friends of friends. Having candidates outside the Board’s network might also help to gain perspective.
Talent Banks are inexpensive and broaden the pool of candidates.
The downside is “The Talent Tail Wagging the Talent Dog” or failure to observe duty of care in first thinking about what talents are required of this Board over the next 36 months.
There are a number of resources for free or inexpensive Board Talent Banks. This list is not exhaustive:
BOARDOPTIONS TALENT BANK. Boardoptions.com has 450 board qualified individuals from around the world. They are both qualified and educated in that they opted for a monthly updated on governance information. According to Google, we are the leading website for “Board of Directors Talent Bank.” On a Microsoft Explorer browser you can do a simple keyword search by going to File---Keyword. This is not a search service. It is more like a corporate “dating” service. Professional Fee is $7500 per “arranged” meeting. An “arranged” meeting is defined as the Board has seen the persons full resume and is interested in meeting the candidate. The candidate has seen information about the company and is interested. For more details:
http://www.boardoptions.com/bod.htm
NATIONAL ASSOCIATION OF CORPORATE DIRECTORS BOARD TALENT BANK. This is a free service of the National Association of Corporate Directors. The list is restricted to those individuals who pay $450 per year to join NACD. The presumption is that there is both interest and competence within the NACD membership:
http://www.nacdonline.org/registry/candidateform.asp?user=
There are other niche Board of Directors Talent Banks. For example www.thebostonclub.com has a list of senior level female executives. www.feiboston.org has a list of senior financial executives who are members of FEI. These services are free.
The downside is the time involved in screening candidates.
RETAINED SEARCH:
The disadvantage of using retained search is its cost.
The advantage of using retained search is:
BOARDOPTIONS,
INC. RETAINED
SEARCH PROGRAM
BACKGROUND:
Boardoptions, Inc. is an outgrowth of Stybel Peabody Lincolnshire, Inc. Founded in 1979, Boardoptions, Inc. Lincolnshire’s mission is to help manage “critical leadership changes when the stakes are high” using Retained Search+, Leadership Coaching, and senior level outplacement programs.
For the past twenty five years, much of Stybel Peabody Lincolnshire’s work involved working with Boards and CEOs around leadership/succession planning issues. Boardoptions, Inc. was developed to focus exclusively on Board issues. Core services include Board of Director retained search and Board of Director Self Evaluation programs. The website Boardoptions.com is a free educational resource for Board members. NATURE AND SCOPE OF
BOARDOPTIONS, INC.S RETAINED SEARCH PROGRAM:
ADVANCING THE BOARD’S PROBLEM SOLVING ABILITY.
Classic retained search is a transactional product with a focus on rapidly making person/job description fits. That model is appropriate for certain roles.
Boardoptions’ Board search is a consultative service. Bringing new talent into a Board of Directors system has implications for Board dynamics and Board/CEO dynamics. A simple person/job description fit does an injustice to the complexity of bringing in new talent.
We will take the necessary time to understand the culture of the Board and the culture of the company. In addition, we use a risk/strategy matrix developed by Professor Anne Pye of the University of Bath in the United Kingdom to look at the problem solving style of the individual members of the Board relative to the risk/strategy situation for the company.
Our goal as retained search consultants is that there be a good person/job description fit AND that the Board’s problem solving approach is at a higher level because of the new addition we were able to helping bring to the Board.
If we find a good person/job description fit but the Board’s current problem solving approach is reinforced, we may have failed.
To make an analogy, college admissions officers at elite colleges do not define their jobs as recruiting high potential freshmen. In consultation with faculty and administration, admissions officers first construct models for what the freshman class ought to look like on a number of variables and how this new freshman class will be different from last year’s freshman class. Once this new freshman class model is approved, the admission officer’s job is to bring appropriate talent to that ideal model by finding the best applicants who will complete the model.
Our mission at Boardoptions, Inc. is to find the best individual/job description match AND to advance the problem solving effectiveness of the Board as a whole using the model outlined in Appendix A.
HOW DO WE CHARGE?
We operate on a modified retained search model.
· $20,000.00 to take on the assignment. This is the retained component. We may use part of this money to retain an independent compensation consultant to help insure that the financial package is consistent with the Board’s goals. · $20,000.00 when we present at least one candidate worthy of being interviewed by the Board. If we cannot find any candidates worth being interviewed, we will not be paid. · $20,000.00 when the selected candidate joins the Board.
Should an assignment be terminated for any reason before the completion of the assignment, the client is obligated only for the pro-rata portion of the retainer.
The maximum professional service fee is Sixty Thousand for the first Board seat and Forty Thousand Dollars for any openings beyond the first seat thereafter.
EXPENSES In addition to the retainer, Boardoptions, Inc. invoices direct out-of-pocket expenses incurred during the conduct of a particular search. These expenses would include travel, special mailings and telephone. Any anticipated expense over $500.00 is discussed in advance with the client.
There are no administrative fees added to the expenses.
SEARCH
PROCESS During the search phase we follow an eight step process.
1. Defining What Is Required(Week 1) A complete analysis of the client’s needs is conducted on-site to establish the work disciplines, the job description required, and the working chemistry. A complete understanding of the clients goals, objectives, culture, mission and strategies is developed through one-on-one interviews with Board members, the CEO, and the CFO. Using the strategy/risk model described in Appendix A, we will develop a profile of the problem solving style of the individual board members and of the Board as a group. We develop a profile of the current risk/strategy position of the client today and where that risk/strategy framework will likely be over the next thirty six months. We will prepare a verbal report for the Board regarding how the Board problem solving style fits the risk/strategy framework it finds itself in today and over the next thirty six months. This report will be about the Board as a problem solving unit. There will be no discussion about individual Board members. This verbal report then becomes a framework for discussion by the Board for what type of problem solving style is required to balance out or to advance the problem solving ability of the Board using the framework in Appendix A. The results then are used to assist in the search. 2. Research (Weeks 1 and 2) Based on the analysis completed in Step 1, our research team identifies targeted industries and firms and spotlights top prospects within them with the required disciplines. 3. Telephone
Prospecting and Sourcing (Weeks 3 to 5) Approximately
75-125 calls will be made to prospects and selective sources to identify
qualified candidates. We will start with our own proprietary list of 450
qualified Board members located in www.boardoptions.com. These people are both qualified to
serve on Boards and requested to receive monthly information from us about
Board governance. The search
process is a team effort with the client, and ongoing communication with the
client is maintained during the entire assignment. This is crucial during the “mid-course correction meeting”
held in approximately Week 4, where profiles of promising prospects are
reviewed to ensure appropriate candidate suitability. Additionally, as part of the team
effort, if a client has prospects he has been considering, these prospects
are introduced into the search process at this time. 4. Prospect Interviewing, Evaluation and Screening (Weeks 5 to 7) Each of the promising prospects and any additional new prospects will be thoroughly interviewed to evaluate them for the approximate skills and personal chemistry. 5. Candidate Presentation (Week 8) Three to five finalists will be introduced to the client for an interview. A written “Confidential Executive Profile” will substantiate each finalist. 6. Candidate Interviews and Evaluation (Week 8+) Client interviews are scheduled and client candidate responses are reviewed. 7. Reference Investigation Following the selection and before hiring, a complete reference check is performed to ensure that candidate is suitable. The majority of these investigations will be conducted on a face-to-face basis. We will also check court documents and newspaper obits for articles. We will confirm college degrees. 8. Formal Offer Guidance and assistance are provided in the preparation of the final compensation package.
GUARANTEE
Only highly-experienced senior principals work on assignments. Boardoptions, Inc. limits the number of ongoing assignments that a senior principal may be involved in to four in order to ensure maximum attention to the client and to the assignment.
Boardoptions, Inc. & Associates guarantees to redo any assignment for one year from the date of hire, at no additional charge, if the successful candidate is not as represented, charging for expenses only.
Enclosed is a sample of a more formal legal contract.
Sincerely,
Laurence J. Stybel,Ed.D. Vice President Boardoptions, Inc. Tel. 617-594-7627
RE:
Board Search Agreement AGREEMENT BETWEEN CLIENT CORPORATION AND BOARDOPTIONS,
INC. Client
Corporation ("Client"), by the signature of an individual duly
authorized to bind the Client, agrees to hire Boardoptions, Inc. (the
"Company") to recruit an individual qualified to the fill the
position of Director, Board of Directors. 1. Term. This Agreement will remain in full
force and effect until the earlier of a successful placement of a Candidate
with the Client or termination by either party. 2. Recruiting
Services. Upon receipt from the
Client of the completed description of the qualifications and duties of the
successful Candidate and the major benefits of the position in the form
attached to this Agreement as Exhibit A (the "Search
Assignment"), the Company will commence to search for, screen and
evaluate potential Candidates (the searching, screening and evaluation
process is referred to below as "Recruiting Services"), The Company
will present potential Candidates whom the Company believes meet the Client's
criteria to the Client for interviews and evaluation. All hiring decisions will be made by
the Client. 3. Exclusivity. The Client agrees that the Company
will act as the Client's exclusive recruiting agent for Candidates. If, during the term of this
Agreement, the Client becomes aware of any potential Candidate(s) (whether by
referral from a third party, through the Company's own efforts or otherwise)
the Client agrees to refer such potential Candidates to the Company for
screening and evaluation in the same manner as potential Candidates
identified by the Company. 4. Fees. In return for the Company's provision
of the Recruiting Services, the Client agrees to pay the Company fees in an
aggregate amount equal to one-third (1/3) of the estimated annual gross
compensation (including bonus) to be earned by a Candidate (the "Search
Fee") to be paid in the following manner: a. Professional
Fees. The Client will pay
the Company one-third (1/3) of the Search Fee as a non-refundable retainer ("Retainer"). The second one-third (1/3) is
contingent upon one or more officers of The Client agreeing that
Boardoptions, Inc. Associates has presented at least one candidate worthy of
being interviewed by them.
Should the Company fail to find at least one candidate that meets this
standard, The Company is not entitled to the second third of the Search
Fee. The final one-third (1/3)
of the Search Fee is due within ten business days after the successful
candidate sourced by Boardoptions, Inc. Associates, Inc. begins the first day
of work. Under this system, only
the first one-third of the professional fees a non-refundable Retainer. The estimated gross annual
compensation (including bonus) of the Candidate, and Search Fee breakouts are
all set forth on Exhibit A to this Agreement. 5. Expenses. The Client agrees to reimburse the
Company for all expenses incurred by the Company in connection with its performance of
the Recruiting Services, upon presentation of an itemized monthly statement
therefor. Monthly expenses in excess
of Five Hundred Dollars must be pre-approved by the Client. 6. Additional
Hires. If the Client hires
one or more additional individuals presented in connection with the Search
Assignment for positions other than that specified in the Search Assignment,
the Client shall pay the Company a fee equal to twenty-five percent (25%) of
each such person's projected first year cash compensation at the time of such
hire. Cash compensation is
defined as base salary plus anticipated cash bonus. The Company shall provide
the Recruiting Services with respect to said individuals and extend the
guarantee specified in Section 7 to them. 7. Company's
Guarantee. The Company will
use its best efforts to identify and refer qualified potential Candidates to
the Client. Any Candidate(s)
submitted to the Client for interview and placement under this Agreement will
meet or exceed the qualifications set forth in the Search Assignment. 8. Limitation of
Liability. Although the
Company will use its best efforts to investigate potential Candidates, the
Company makes no representations as to the background of any
Candidate(s). Furthermore, the
Client acknowledges that it will make the final hiring decision in its own
discretion and based upon its own evaluation of the qualifications of the
Candidate(s). Therefore, the
Client agrees that it will not assert any claim against the Company arising
out of the actions or omissions of any Candidate(s) hired by the Company. 9. Responsibilities
of Client. The Client agrees
to fully and expeditiously consider all Candidates presented by the Company
for the position; interview qualified ones thoroughly and extend offers to
those who match the specifications of the Search Assignment. At all times, the Client shall act
reasonably with regard to facilitating the placement to conclude the Search
Assignment. 10. Notices. Any notice delivered under this
Agreement will be in writing and delivered either in person, by certified or registered mail, or
by overnight courier to the following addresses: if
to the Client, to:
Attn.:
if
to the Company, to:
Boardoptions,
Inc. 60
State Street, S. 700 Boston,
MA 02109 Attn.:
Laurence J. Stybel, Vice President Notices delivered in person
will be deemed effective upon receipt, mailed notices and notices sent via
courier will be deemed effective upon deposit in the mails or with the
overnight courier service, as the case may be. 11. Disputes. In the event it becomes necessary to
enforce or interpret the terms of this Agreement, the dispute or claim shall
be submitted to arbitration in accordance with the Rules of the American Arbitration Association. The award shall include reimbursement
to the prevailing party for reasonable attorney's fees, arbitration costs and
other necessary disbursements.
Judgment on the award may be entered in any court having jurisdiction
thereof. 12. General. The undersigned acknowledge that this
Agreement (including all attached Exhibits) is the complete statement of the
respective obligations of the parties, and that all previous discussions and
agreements, whether written or oral, are either contained in or superseded by
this Agreement. Furthermore, the
parties agree that this Agreement cannot be modified other than by a signed
writing executed by both parties.
This Agreement is personal to the parties and cannot be assigned by
either party without the prior written consent of the other party; however,
the rights and obligations set forth herein shall inure to the benefit of,
and be binding upon any successor of the Client whether by merger, sale,
reorganization or otherwise. If
this Agreement becomes impossible or unnecessary to perform due to
circumstances beyond the control of either party, the Company shall be
discharged from completing the Search and the Client shall owe nothing
further than the amount actually paid to the Company. This Agreement will be construed
under the laws of the Commonwealth of Massachusetts, without regard for its
conflicts of laws provisions. INTENDING TO BE LEGALLY
BOUND, the parties have executed this Agreement as of this date of ,
200X.. BOARDOPTIONS, INC. By: By:
Laurence J. Stybel, President
Its:
(the "Company")
(the "Client") 3 EXHIBIT A
Search Assignment
1. Position/Title: Member,
Board of Directors 2.
2.
Name of Chairman:: 3. Location: 4. Description of
Duties: To Be Determined
6. Education and Experience
Requirements/Guidelines: To Be Determined 7, Restrictions
on Search (e.g. relocation considerations, noncompetition or nonsolicitation
agreements, former employees, etc.): To
Be Determined.
8. Compensation: To Be Determined. EXHIBIT B
Candidate's Estimated Annual Gross Compensation; Fees
FOR MORE INFORMATION, CONTACT:
Dr. Laurence J. Stybel Boardoptions, Inc. 617 594 7627
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