Four Tips for Working with Board Search Firms
BY Ralph Ward
As boards increasingly become less an informal network of cronies and more a hardworking corporate resource, the search for new board members becomes increasingly vital. The percentage of new directors recruited through professional search firms is steadily rising in response.
However, putting a headhunter on the case can bring its own pitfalls if badly handled. When your board decides to use an outside search firm to fill a vacancy, what do' s and don' ts should you keep in mind?
1. This is different from an executive search. For starters, your executive search firm knows it won' t get rich doing a board search. While the fee for a management search is typically a percentage of the executive' s often-hefty pay package, board searches will involve a flat fee -- and usually not for an amount that sets a headhunter' s heart racing. In fact, search firms often do director searches as a loss leader to keep their big executive search clients happy. This means that you might get what you pay for in terms of research, scope, and background checking.
Firms that specialize in board searches or matchmaking are a growth market and may do a more targeted job of finding the boardroom talent you need. Virtual-board.com, Boardroom Consultants' Board-search.com, Stybel Peabody' s Boardoptions.com, and Boardseat.com are a few of these board search specialists. Says Boardseat' s Stephen Fowler, " You need to find a company that really understands what goes on at board meetings."
2. Be realistic. Some corporations assume that a search firm can do miracles. Dennis Carey, of Spencer Stuart in Philadephia, finds that boards come to him and, " assume we can get them Jack Welch? well, no, we can' t. So part of the process is helping the board get a reality check on who might be available based on geography, industry, schedule, and other factors." Carey says that even the most savvy of search firms still average an 8 to 1 turndown ratio when approaching top Fortune 500 execs for board seats.
3. Use the search firm to help you winnow down to a final candidate. Carey says a common search firm headache is the client who, " makes contact with more than one candidate at a time." Inevitability, that client will back off of one in preference for another, which " gives the impression that someone is more important to your board. This isn' t an executive search, where everyone knows they' re in a horse race," and the result is hard feelings.
4. Make sure the headhunter knows who' s in charge at your end. Despite the growing power of boards, it' s still usually the CEO who works with a search firm on finding a director. Often, though, savvy CEOs want the firm to work in concert with the board' s nominating committee -- or, on occasion, the committee itself handles the search from the start. However you handle it, there should be no board/management battles from your side on who the headhunter should work through. Any smart headhunter will view such squabbling as a good reason to warn his best prospects away.