Today’s Board Recruitment Priorities

In this Q&A, Deloitte’s Deborah DeHaas shares the skillsets gaining momentum in the boardroom and priorities for 2019.

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Industry-specific experience is at the top of the list of board recruitment priorities, ahead of business leadership, accounting, digital or technology strategy, according to a recent report. Deloitte’s Center for Board Effectiveness and the Society for Corporate Governance recently released the Board Practices Report, which highlights emerging governance initiatives for boardrooms across culture, talent, strategy, risk, technology and innovation.

FEI Daily spoke with Deborah DeHaas, Vice Chairman and National Managing Partner Deloitte Center for Board Effectiveness, about the value of a diverse board, and 

FEI Daily: Industry-specific experience topped the list of board recruitment priorities ahead of business leadership, accounting, digital or technology strategy. Is it different from past years?

Deborah DeHaas: Historically, industry experience always has been a high priority. But, I’m seeing a shift. So many industries are converging and technology is impacting every industry. Companies want the board members to easily understand their industry and their business, but they also are finding that there are other industries that have perhaps experienced disruption sooner, or differently, or have different business models that they're looking to leverage, and leverage those experiences in their own boardrooms. So, while industry is still rated very similarly, it's a little bit different in terms of how they think about it.

The second area was digital or technology strategy experience, and I think we've all continued to see that desired skillset continue to rise in important in the boardroom. In the most recent Spencer Stuart board index report from 2018 there was a significant number of new directors who came either from the technology industry or with technology backgrounds themselves. 

For many years the most sought after set of experiences has been sitting or former CEOs. And I think that's been a proxy for business leadership and experience. Certainly financial skills are always important in the boardroom. The only requirement that boards have is they need to have at least one qualified financial expert on the board. So I think finance skills have been and always will be important, and certainly we see a number of people who bring either CFO experience, treasury, or other, finance, accounting experience are valuable in the boardroom. And then there’s the cyber expertise. I sort of link that to the focus, from a risk standpoint, on how the continued proliferation of technology creates more of that risk for all companies.

FEI Daily: 94 percent of respondents said their boards are looking to increase diversity. Is the increased focus on industry specific experience, and technology strategy, and cyber, serving the boards’ need to increase diversity?

DeHaas: I believe that many organizations now appreciate how much value a diverse board can bring and how bringing together a group of people who truly have different experiences, perspective, skills, backgrounds, particularly given the fast pace of change and disruption. 

The heightened attention in the past several years from investors focused on diversity is impacting change in the boardroom. Typically that focus has had more of a gender lens to it than perhaps some of the broader forms of diversity. Even though they do indicate that gender is the most important criteria, I do think they're thinking about that more broadly. 

The other thing that is happening is that as boards are looking to bring in some of the skillsets that they view as being important, many of the individuals who may have some of those skillsets are also bringing some generational diversity into the board room. I don't know if the numbers show that. I think still the average age of boards is in the low sixties. But certainly when you look at some of the newer board members that are being added, they are bringing in more generational diversity into the boardroom than perhaps we've seen in 10 years ago. 

FEI Daily: The report also makes the point that, while other types of professional experience, such as marketing and HR, may be overdue for board representation (and could contribute to diversity), they do not seem to be gaining traction as stand-alone recruitment priorities. Why is that?

DeHaas: I don't think we're seeing those getting as much attention as some of these other skillsets. But, having said that, as organizations think about digital backgrounds, obviously there are a number of marketing executives who would bring that expertise. So they may not be saying they're looking for marketing expertise per se, but oftentimes I think some of those skillsets do reside with them. Almost every organization is focused on how to continue to grow organically. And someone who would bring those marketing experiences would hopefully have some great insights and perspectives around growth as well. The human resource piece… there could be a shift that we'll see occurring relative to that. 

From the conversations that we're having with boards, the skillsets that are required for the work of the future, the implications of some of these emerging technologies on the workforce, the skills, the capabilities, etc., I wouldn't be surprised if those who bring expertise around human resources, talent, future of work, diversity and inclusion, some of those key talent topics are certainly going to be very much top of mind in the boardroom, and my guess is boards will conclude they need to make sure they have the requisite skills there to be able to address them.