Preparing for Corporate Board Opportunities
By Teresa Bryce Bazemore
April 8, 2019
(Editor's Note: this piece appears courtesy of mPower, MBA Promoting Opportunities for Women to Extend their Reach, a networking opportunity exclusively for women in the real estate finance industry. For more information, click https://www.mba.org/get-involved/mpower.)
Teresa Bryce Bazemore has more than 25 years of experience as a senior executive in the mortgage banking field, including building both mortgage insurance and services businesses. Prior to launching her own consulting firm, she served as president of Radian Guaranty for more than 10 years. Before joining Radian Guaranty in 2006, she held highly visible positions with mortgage lenders, including Nexstar Financial Corp., Bank of America Mortgage, PNC Mortgage Corp. of America and Prudential Home Mortgage. She currently sits on the Board of Directors of Chimera Investment Corp. and the Mutual Funds Boards of T Rowe Price. She was also on the board of the Federal Home Loan Bank of Pittsburgh until early this year when she relocated to Los Angeles.
Over the years, I always wanted to successfully move onto corporate boards, but those opportunities seemed elusive. I certainly had served on many non-profit boards over the years and many of the more recent ones were with complex organizations with significant staff. However, the few opportunities that did arise always presented a conflict for me since they were with lenders and as the President of a mortgage insurer, I could not and would not serve on the board of a customer or potential customer.
Fortunately, just after I announced my retirement, I had a number of corporate board opportunities arise. They came much faster than I anticipated. Many people have asked me to share my thoughts on how to maximize your opportunities for corporate board service. I wish I had a magic formula, but after reflection, there are some recommendations that I can offer.
There could not be a better time for women, people of color and even younger people to be tapped for a corporate board. Significant investors like BlackRock and State Street have been very vocal on the subject of board diversity. In an effort to push smaller companies to diversify, Glass Lewis and Institutional Shareholder Services, the most influential proxy advisory firms, recently announced that it will advise investors to vote against the chairs of the Nominating and Governance Committees of companies that have no gender diversity.
Companies are starting to understand that as a business imperative, it is important to have diversity of thought on boards. It is well documented that boards with two or more women have better financial performance. In addition, it is often women that are making the buying decision which includes financial products. Furthermore, with the focus on data, digital, marketing through social platforms and other changes in how we do business, younger people (less than 50) often have more relevant expertise.
It is also worth noting that board turnover is picking up since most boards in the S&P 500 have implemented mandatory retirement ages which typically range from 72-75. Also, a relatively small percentage of boards have term limits.
The following are tips based on my observations:
Tip #1--I dislike the overused term of networking, but it is at the top of my Tip List. Why? Because according to the National Association of Corporate Directors, about 39% of new directors were identified through a search firm. This number has increased over the past few years as boards find that search firms are the best way to identify diverse candidates and candidates with unique skills sets or backgrounds. That means that the majority of successful candidates either knew a board member (including the CEO) or someone in a board member's network.
Even when you think about the search firms, they are identifying candidates through referrals from others. Think about all of the times when an executive recruiter has asked you to suggest potential candidates for a position. Boards are still interested in finding someone that will be a "fit" with the rest of the Board and often feel more comfortable with a candidate sourced by other board members or even executive management. In my case, one board was through an executive recruiter who received my name from a work colleague, one was as a result of a recommendation by outside counsel and one resulted from knowing a current board member through professional activities.
Tip #2--The role of a board member is oversight, not management, and therefore the skill sets overlap with what is needed for management, but the emphasis may be on different skill sets. Boards are very focused on making sure that they round out the skill sets they have determined that they need. In the past, a large number of board members were current or former CEOs and CFOs. While those skill sets are still important, boards have expanded some of their skill set needs to include, for example, technology/cybersecurity, risk management, human resources and marketing/digital. In an effort to increase diversity, there has been more of a willingness to expand the board to include other members of the C-Suite or division heads of large business units. DirectorMoves.com documents Director, CEO, CFO and GC movements which can give you some insight into the choices that boards are currently making.
Tip #3--Let people know you have an interest in joining a corporate board. This goes hand in hand with Tip #1 but is worth noting separately. You will be more top of mind when recommendations are sought if your network knows that you are seeking an opportunity. Also be realistic about your skill set and be willing to have frank conversations about where you are in your readiness to be a board member and the size of company that may find you to be the most suitable for them.
Tip #4--Consider joining an organization focused on education and development of directors or on connecting board eligible candidates with boards. I would recommend the National Association of Corporate Directors. NACD has an extensive annual conference and numerous educational sessions. The local chapter meetings are very informative and an even better forum for networking. The cost of the annual conference is pricey so attending the chapter meetings may also be more beneficial and cost effective. The NACD has a track to become a Fellow that they define as "The Gold Standard Director Credential." I don't know whether it will help you land a director seat, but it certainly cannot hurt to learn more about being an effective director. Each year they honor the "NACD Directorship 100," directors that are "role models in promoting exemplary board leadership, oversight, and courage in the boardroom."
There are other organizations focused on connecting board ready individuals, particularly women, with boards. OnBoard out of Atlanta hosts an evening of short networking sessions each year. It reserves a few spots for members of Ion, a collaboration of professional women's groups. You have to apply to gain a spot and you learn what companies you will have meetings with once you arrive. I have also heard of other programs of this kind sponsored by Deloitte and the New York Stock Exchange. BoardProspects is a closed on-line community that purports that their Corporate Members have a 95% success rate of recruiting individuals from the BoardProspects community to their Board of Directors or Advisory Boards. It just recently closed the membership meaning that in order to join, you must apply and go through a credentialing process for the purpose of verifying that you have the credentials sought by corporate boards.
Tip #5--For many reasons, I have been a huge proponent of active participation in your industry trade association. For those of us in the mortgage industry, that is the Mortgage Bankers Association. My participation on MBA committees and then the Residential Board of Governors and Board of Directors helped me develop a wonderful network of mortgage executives across the country. I have had the added benefit of many of them becoming friends. There are other organizations that are also worth exploring--for instance, the professional women's networking group in your area. In Philadelphia, that is the Forum of Executive Women. The Forum often receives information about board opportunities that it distributes to its membership. Another option is your local chamber of commerce if you can participate in a way that exposes you to C-suite leaders in your community.
Tip #6--It is helpful to have C-Suite executives that you know, refer you to executive recruiting firms that have Board Search practices. Typically, recruiters seem more interested in recommendations than a direct approach. NACD also has a recruiting arm. Other possibilities for great referrals are lawyers and accountants. Some of them are asked for suggestions by their clients. I have been contacted in this way a number of times.
Tip #7--Over the years, I served on many non-profit boards, mostly because I was interested in their mission. While that is still an important criterion for me, I have learned that there is a strategy here to make this experience possibly translate into a corporate board position. First, take a look at the level of executive the board attracts. Boards that attract CEOs provide another possible networking opportunity. In addition, large non-profits that are the size of a small or medium company and that have strong governance practices can be a good place to learn more about corporate governance, including compensation practices and audit committee responsibilities.
Tip #8--You need to prepare a resume or bio that highlights the expertise you have that would make you a qualified board member. Think about Tip #2 in particular as you prepare. There are consultants that can help you develop a bio for this purpose. Also, take a look at your LinkedIn profile and make sure that you are highlighting your relevant expertise there as well.
Getting that first corporate board is the hardest. It is sometimes difficult to determine whether you should jump at the first opportunity. I got advice not to agree to join too small of a company board given my expertise. There is a focus now on "over-boarding" meaning it is frowned upon to have more than 3-4 corporate boards and that is dependent on the complexity of the organizations. Also, consider the risk profile of the company. A company with a lot of operations could have more risk and require more of your time. Size often has an impact as well on the compensation level since most boards benchmark their compensation against similar organizations in the same way that you would do executive compensation benchmarking.