Raising Up NEDs: Finding Alternative Paths to the Boardroom - Boardroom News

Raising Up NEDs: Finding Alternative Paths to the Boardroom

Many boards of directors throughout the United States are facing a peculiar problem. While there’s no shortage of executives looking for board roles — particularly non-executive directorships (NEDs) — few are getting those roles. At the same time, boards are on the hunt for NEDs but can’t seem to find candidates with relevant experience.

Boardrooms have become filled with a homogenous population of people who have reached the pinnacle of their corporate careers and offer a treasure trove of experience that translates to business success. Companies facing this reality have encountered a conundrum: is it viable to downplay experience in favor of talent and skills to achieve greater diversity across boardrooms? 

While doing so may allow more executives to step into NED roles, one significant question remains. How do boards develop executives’ capabilities so that they are ready to face the challenges of directorship?

Apprenticeships as a Possible Solution

In the face of this issue, many executives have begun to participate in board apprenticeships. Through executive search or corporate “matchmaking” services, executives are getting the opportunity to observe and shadow board members as they go about their daily work. 

In some apprenticeships, participants are mentored by a coach who helps them navigate boardroom relationships. These apprenticeships offer several benefits for both the company and the participant:

  1. Executives gain a true understanding of what NED roles are truly like, including the nuanced decision-making required to find success in the job
  2. Executives also get the opportunity to boost their resumes, as having been mentored by successful board members is viewed as valuable experience
  3. Businesses are able to find and train a diverse group of future leaders, which means that apprenticeships can be great for building the leadership pipeline
  4. Companies can take advantage of executives’ talent and skills by having them act as specialists or consultants for areas like marketing and compliance
  5. Companies and board members are able to “try out” candidates to get a true sense of their personalities and capabilities before they commit to them

    When done right, apprenticeships can answer the question of how to construct diverse boards full of candidates with talent and skills without ignoring the need for experience and capability.

    The Problem With Apprenticeships

    They may carry several benefits, but apprenticeships are not a perfect solution. While participants sign non-disclosure agreements, boards do worry about confidentiality issues with apprenticeships, as well as being accused of going after candidates merely for their diverse backgrounds and not the merits of their experience or qualifications.

    Still, boards do aspire to greater diversity and often find it difficult to achieve it on their own. While this particular model of apprenticeships may not be the answer for every company, some leaders are seeking new solutions.

    Possible Alternatives to Apprenticeship Matching

    The traditional model of apprenticeships, where companies employ corporate matchmakers to find candidates, isn’t the only idea to have been proposed.

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    Leaders at some of the top companies have made the decision to start their own in-house apprenticeship or fellowship programs. 

    These may involve participation both from their own executives and outsiders. However, many have a difficult time knowing how to market these programs to outsiders, which means that participation is often low.

    Similarly, a few enterprises have developed more permanent junior or “NextGen” boards to provide more senior NEDs with insight, feedback, and ideas.

    Like apprenticeships, the idea behind junior boards is to create a pipeline of candidates with extensive experience and the qualifications necessary to serve when board seats become available.

    Finally, some organizations are providing courses and diploma programs in corporate governance. These educational tracks are aimed at allowing executives to develop the knowledge they need to function well as a NED.

    They can sometimes be paired with an apprenticeship to meet the need for practical experience.

    Experience Still Makes the Best Candidate

    Because initiatives of this nature are so new, it remains to be seen what will come of them. For now, companies are not only facing challenges finding participants, but they aren’t sure the model is producing the caliber of candidates they’d hoped for. And since participation doesn’t translate to permanent board roles at the rate some feel it should, there’s no doubt that these proposed solutions need development.

    However, most current NEDs can agree on one principle: having a solid track record of executive experience, a robust skillset, and good judgment at your current level is still key for success in an NED role. Many note that the best candidates have typically been CEOs, CFOs, and other senior executives in the company who can handle pressure and make good decisions in all circumstances.

    The big question, then, may not be how to create more diverse boardrooms at all. Instead, companies may need to evaluate diversity at the senior executive level to solve the problem with their pipelines. Doing so may help them turn talent and skills into true NED capability.

    Solving the Problem One Boardroom at a Time

    Many of the boards from the nation’s top companies are looking to overhaul the diversity of their leadership. However, this task presents a huge issue when attempting to ensure that the same candidates with the necessary talent and skills also possess the necessary experience and decision-making capabilities to do the job well and steer the company in the right direction.

    Board apprenticeships facilitated by corporate matchmakers have been held up as one solution to the problem. However, many boards do not want to take them on because of the inherent risks they present. Of course, other solutions have been proposed, including in-house fellowships, junior boards, and diploma programs. However, they don’t always translate into better or more available NED candidates.

    Ultimately, what today’s companies need are more senior executives with diverse backgrounds who have both the experience and the skills needed to create good judgment in the boardroom. This is what top enterprises desire and what will give them the pipeline of ideal NED candidates who have what it takes to keep the company moving forward. 

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