Director recruiting before the Internet

There is little disagreement that the Internet has revolutionized every aspect of society.Technology has enabled boards to identify and recruit directors who are better advocates for the shareholder by increasing the number of independent and diverse candidates with specific expertise. These changes have occurred through pressure from institutional investors, the SEC and regulatory agencies as well as advocacy groups like the Council of Institutional Investors.            

The key to identifying this broad base of potential candidates is through the utilization oftechnology that began in the 1980s with the personal computer. Prior to the Internet, boards and consultants identified new directors by applying the ‘six degrees of separation’ theory. Board members of the 1930s, ’40s and ’50s were primarily men — white business men — who were investors in the company and acted more as advisors to management, with a primary interest inprotecting their investment. There were few formal director recruiting processes because new directors were usually acquaintances.            

Slowly in the 1960s, ’70s and ’80s boards began to change, with regulatory pressure formore accountability and transparency, less overboarding, and more rotating off ineffective directors. Suddenly boards had to find more independent directors. Then  Pre-Internet director recruiting looked like this:

• Candidates primarily came from personal referrals, business magazine and newspaper writeups, Who’s Who listings, and hours of telephone cold calling. The greatest asset was a tenacious, creative researcher.  

• Candidate information was handwritten and transcribed on a (possibly) non-correcting typewriter, likely with multicolored carbon paper.

• There was little background information available on potential candidates so there were sometimes surprises (such as a potential insider trading allegation or other nefarious infraction).  Now Having moved beyond the ‘six degrees of separation’ methodology of finding directors, today’s board recruitment has these marked characteristics:

•Boards look for candidates who bring expertise and a diverse perspective to fill current gaps in order toachieve long-term strategic goals.

•Companies have a choice of conducting their own searches using the Internet, specialty data bases or sophisticated big data software.

•Extensive background data allows boards to have a better understanding of whether a candidate’s expertise is right for their goals and expedites the process. Today’s boards are no longer comprised primarily of individuals steeped in a single focused career. They are nontraditional, multi-trained global businessmen and businesswomen who understand complex enterprise issues. These executives do not hesitate to express a minority opinion and understand the importance of collaboration in the boardroom.