An Indirect Approach To Recruiting Directors

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Of course you know what you want of your outside directors. They should be wise, experienced, with diverse financial backgrounds. People whom you and your associates admire and can learn from. If one should look like John Houseman, communicate like Ronald Reagan, and manipulate figures like David Stockman, so much the better.

Drawing up the criteria is easy; it is filling the positions that may be difficult. As a result, more and more organizations are turning to professional search firms to help them build a board.

One such firm is Boardroom Consultants Inc., of New York, a company devoted solely to recruiting board members. While most of the firm's clients are medium-to-large corporations, Boardroom Consultants's president, William H. Chisholm, says that he has located a director for a family-owned manufacturing company in Maine with sales in the $10 million range and done search work for other small companies as well.

"There are many chief executive officers who would like the experience and exposure [of sitting on a board]," Chisholm explains, "and there are a lot of top executives of major corporations reaching retirement age who want to keep busy. Serving on a board, with four to six meetings a year and a little homework to do in between, is just the sort of thing they're looking for." For his services, Chisholm charges a fee equal to the client corporation's yearly director's pay, with a minimum of $5,000. Clients pay 25% of the fee each quarter, with the option of canceling after six months.

Small companies seeking directors can also join the National Association of Corporate Directors in Washington, D.C., which operates a computerized referral service. Potential corporate directors keep their qualifications on file; a member company can state the sort of person it seeks and receive a roster of suitable candidates. The organization, which was founded in 1977 and became part of the American Management Associations in 1979, also conducts seminars and other educational programs about corporate directorship. According to executive director John M. Nash, it currently has 1,200 members and 350 individuals listed in its referral register. Membership costs $200 a year.

"Most small companies don't appreciate what two or three good outside directors can do for them," says Chisholm. "If you've already got some people on the board who've been where you want to go, you 'Il get there faster."