The old view of view of corporate governance is where board appointments still rely on the “old-boys club” and it’s all about “who you know counts for more than what you know, and where a director’s best asset is a network that guarantees him or her a seat regardless of performance”.
Networking still remains a major part of board appointments and an essential skill for aspiring directors. A strong corporate governance network can advise, mentor and endorse aspiring directors, and reassure boards that the candidate is well connected.
Boards, understandably, rely on networks. When a new appointment is needed, directors inevitably turn to their personal networks as a starting point. They might recommend colleagues who are available, have the right skills and are a good fit with the board.
Networks also reduce the risk of bad board appointments. Unlike executive appointments, an underperforming director cannot be sacked and quickly replaced on most boards. The chairman must be sure a director who might serve three three-year terms on a board is a strong fit. So they use their networks to find trusted colleagues who endorse an emerging director.
That is not easy for all emerging directors. Networking in executive circles often means talking to people in similar companies or industries. Conversations can be more goal-focused and outcomes can be faster. In governance networking, an aspiring director might have to network across the private, public, government and not-for-profit sectors, and across industries.
Also, board appointments can take much longer. An aspiring director might need several years of networking to build a full governance portfolio. Unlike executive networking, board networking can require immersing oneself in the governance community, to build contacts and profile and demonstrate a long-term commitment to modern, professional boards.
Finding a balance
Another challenge is marketing. Aggressive self-promotion by directors sits uncomfortably with many boards even though it is common in executive circles. But being able to sell oneself to boards, without being overt or a bore, remains a useful networking skill.
Top Tips for governance networking
1. The transition – Start planning and building a governance network well before leaving an executive role.
2. Executive networks – Keep current networks alive. Aspiring directors who have not served on boards may need endorsement.
3. Networks within networks – Those who want to build diverse governance portfolios may need a strong contact base in the not-for-profit sector and another with government enterprise.
4. Thought leadership – Develop a position on key governance issues, through the Australian Institute of Company Directors or industry events, or by posting opinion pieces through prominent online networks.
5. Search firms – Register your interest in board positions with search firms that specialise in governance appointments.
6. Be realistic – Unless you are a former Prime Minster, you may not land Air New Zealand as your first board role.