Having an international board member

Should you look overseas for your next board member?

New Zealand is too small a market for many of our companies. If our ambition is to be globally competitive, therefore should we also be striving for greater international diversity on our boards?

It could be argued that an overseas based director in a target market could open doors to local networks and facilitate communication as well as provide an understanding of regulatory requirements, government issues and the way that business is done within that particular culture.

Some directors on international boards find travel to be a very real issue, particularly for directors who are committed to making regular trips between New Zealand and the US or Europe.

Global firms certainly benefit from having a mix of nationalities around the board table, but there are practical issues to be overcome, such as when and where you will meet and how those meetings will be run. Ideally, directors would always meet in the same room.

Conference calls and teleconferencing provide alternatives to some face-to-face meetings, but even with good the technology, it’s not a substitute or the same. You inevitably lose out on some aspects of body language and also the informal conversations that take place outside the boardroom. Directors usually know each other well which makes the occasional teleconference less of a problem. But these relationships are developed over time through face-to-face contact and they still meet regularly in person throughout the year.

Travel is often expensive – along with physical costs like fares and hotel rooms, long haul trips take a physical, emotional and environmental toll. They are also immensely time consuming, which could restrict the number of directorships one person can manage.

The burden is exacerbated by the growing amount of hands-on work tackled by committees.

New Zealand’s population is small compared with Asia, the US and the UK. Does that mean our pool of directors is so small by international standards that companies have no choice but to bring in talent and experience from overseas?

There are many New Zealanders with international experience capable of filling roles as they become available. The average NZ executive director has travelled well, understands the way business is done and is as capable of bringing those skills to a New Zealand board as someone based overseas.

There are also New Zealand directors with a portfolio of overseas companies who travel extensively.  The fact that they live in New Zealand doesn’t necessarily isolate them from all things international.

Business operates in a global world and it makes sense to focus on getting a director with the right skill set mix first.  International experience is part of that mix.

The method of recruiting is also essentially the same except the initial interview is usually via telephone or skype. The preferred candidate is then flown to New Zealand to meet the board.

There are no clear statistics on how many New Zealand boards have overseas directors, but while the numbers aren’t likely to be high, they may be growing for a number of listed companies such as Spark, Air New Zealand and Xero.

I suspect they will steadily increase as many companies and start-ups are globally focused.

Any new international director must have skills which complement the rest of the board. In the end, whether you’re looking in New Zealand or overseas, it will always be a lot easier to appoint a director than to have one removed.

Henri Eliot is CEO of Board Dynamics