Board succession planning: Identifying & developing future board leaders
An effective board succession plan is a cornerstone of good corporate governance. It ensures a smooth transition of leadership, maintains the board's effectiveness and fosters the long-term sustainability of the organization.
But with board members serving staggered terms and departures sometimes unexpected, identifying and developing future board leaders becomes a critical, ongoing process. This blog post addresses some frequently asked questions about board succession planning and focuses on:
- What is board succession planning?
- The benefits of a board of directors’ succession plan
- The steps an organization should follow to create a plan
- The challenges involved
- Best practices
- How technology can streamline the planning process
What are the benefits of a robust board succession plan?
- A well-defined board succession plan offers numerous benefits to organizations: Minimizes disruption caused by board member departures, planned or unplanned
- Allows for the identification of candidates with the necessary skills and experience to address the board's evolving needs and strategic direction
- Demonstrates thoughtful governance practices, which can enhance investor confidence and attract top talent.
- Ensures you can assess the board's current skillset and identify any areas where additional expertise may be needed.
- Helps visualize potential vacancies with a matrix that maps current board members' terms, expertise and leadership aspirations against the identified skill gaps.
- Ensures a greater level of diversity, which strengthens the board's decision-making by fostering more inclusive discussions and challenging assumptions.
- Encourages board members to identify potential candidates from their professional circles who align with the organization's values and skillset needs.
- Provides ongoing training opportunities for new members in specific areas like board governance, financial reporting and risk management.
- Integrates new members into relevant board committees based on their expertise and interests.
Key steps in the board succession planning process
There are several important steps in the board succession planning process. That means it can't be done in one afternoon. It must be handled carefully and always involve the whole board. After all, as your business evolves, so too does the need for what future board members can bring to the table.
Here are the steps you should follow when devising your plan:
Step 1: Create a board development committee
Establish a team of directors who will lead the planning process. This ensures accountability which helps with moving things forward. Board members should be assigned specific roles and responsibilities.
If members aren’t quite sure where to begin, a board succession planning template provides a helpful starting block.
Step 2: Build engagement
Succession planning is often dismissed as tomorrow’s problem, so you need to build engagement among the organization and ensure the importance of succession planning is established.
Step 3: Identify priorities
Think about what the business priorities are now and what they may be in the future. These will align with your overall goals and objectives and allow you to focus your efforts on the sort of qualities you’ll look for in future leaders.
You should also create a checklist to make sure no part of the process is overlooked.
Step 4: Complete regular board self-assessments
A board of directors self-assessment allows your organization to evaluate the effectiveness of your board. This means you can identify areas that need to be improved, which can be incorporated into your plan. Evaluations should be completed routinely, so you can proactively make positive changes and ensure the continuous effectiveness of your board.
Step 5: Conduct a skills gap analysis
A skills gap analysis will help you identify which skills your board lacks so you can make an effort to bring in new talent with these specific skills. A variety of skills helps you become more agile, flexible and proactive.
Step 6: Be mindful of the need for diversity
A board with members all who have similar backgrounds, skills and experiences is unlikely to be as effective as it can be. Diversity should be considered at all times, including gender, race, beliefs, age and more. This helps propel your business forward and introduces new perspectives and ideas.
Step 7: Encourage transparency at all times
Ask your board to be as transparent as possible so you know when there may be an upcoming vacancy on your board. This may be due to them being offered a position elsewhere, retirement, or something else. Of course, not all members who depart the board can be foreseen, but openness and honesty should always be encouraged.
Step 8: Create a list of possible candidates
If you’ve followed the previous steps, you’ll now be in a solid position to identify which candidates will slot into your board well. This includes ensuring diversity, gaps in skills are filled and you can continue to push towards your goals and objectives. Whether these roles become available in the near- or medium-term future, you’ll be prepared once opportunities arise.
Addressing challenges in board succession planning
Creating a board succession plan is a continuous and necessary process to protect the future of your business. However, as with every other important action, it can come with challenges that you need to address.
Here are five challenges you may face and how you may choose to address them:
- Resistance to change: Fear of the unknown or risks of upsetting the status quo can lead to resistance to change. This can prevent proactivity and lead to delays down the line if not addressed ahead of time. The board must encourage open communication and the benefits must be emphasized to ensure the long-term stability of the business.
- Identifying suitable candidates: Once you identify the skills, qualifications and experience required in candidates, finding those who have these and align with your organization’s culture and values can be tricky. It’s also possible that you’ll find the perfect candidates, but then their priorities and availability will change.
- Knowledge transfer: Getting new board members up to speed can be a long and complicated process. This includes everything from the history of the business to specific operational nuances. A mentorship program can help with this, as can comprehensive ‘user notes’ which act like a bible that new board members can refer to.
- Diversity concerns: Ensuring diversity in your board of directors is important and finding candidates that are suitable may be difficult due to biases, limited networks, or your usual recruitment processes. This can impact decision-making and can limit new ideas and innovations. Consider reevaluating your recruitment processes and highlighting our desire for a more diverse and inclusive board.
- Timing and planning: Identifying and developing future board leaders can be a long process and is one where decisions shouldn’t be taken lightly. As a result, you may be forced to make a rushed decision if you don’t give yourself enough time which may result in recruiting a board member that doesn’t align with your organization’s needs.
Board succession planning best practices
To help overcome potential issues, here are four board succession planning best practices to consider when putting your own plan together:
1. Ensure accountability and commitment
By not assigning roles and responsibilities to specific board members, you risk things simply not getting done. Accountability is key, so give board members roles and timeframes to keep the process moving. Because change can happen quickly and at any time, proactively thinking about the board’s future helps prevent issues and delays down the line, which can have a huge negative impact.
2. Tie all decisions back to the goals and objectives of your business
Use data to identify what your business lacks and what it needs to move forward. This may be specific skills you identified in a skills gap analysis, increased diversity, or a greater understanding of emerging technologies and practices.
You must undertake regular board evaluations so you can spot opportunities for improvement as early as possible. Any decisions you make should be for the benefit of your organization and its goals and objectives.
3. Encourage transparency
While the process should be confidential, complete openness among all board members is critical. This helps with communication and trust, which leads to better decision-making.
4. Leveraging technology for streamlined succession planning
Certain parts of the succession planning process may not be done as effectively as possible if you don’t have all the right technology in place. Spreadsheets and notepads will only get you so far.
The implementation of new tools and technologies, such as board evaluation software, ensures processes are streamlined and efficient. This allows you to get all the data you need to make impactful decisions in less time.
Here are other technologies you can introduce that improve the planning process:
- Digital communication platforms, such as Slack or Microsoft Teams, provide a central platform to share information even if you have a fully office-based team
- Talent management platforms, such as LinkedIn Recruiter or Indeed, used to find potential candidates
- Knowledge-sharing platforms, such as SharePoint, where documents and knowledge can be stored and shared
- Mentorship platforms, like Chronus, help give new board members all the knowledge they need
- Project management tools, such as Asana, which helps assign tasks to specific board members and increase accountability
Meghan Day, Principal Solution Designer, at Diligent says, “Technology plays a major role in ensuring that processes are not only fast and efficient, but also accurate and simple to understand. This allows boards to make data-driven decisions far more quickly, which frees up their time for other tasks. This is especially true of the board succession planning process, which is often long and drawn out. Technology streamlines each step and helps secure the future of an organization.”
Planning for seamless transitions
By proactively identifying potential board leaders and dedicating resources to their development, organizations can build a strong pipeline of talent to ensure the board's effectiveness for years to come. A well-planned and executed board succession process fosters smooth transitions and continuity in leadership.
Remember, board succession planning is an ongoing process. Regularly review and update your plan to reflect changes in the organization's needs, the board's composition and the broader business landscape. By developing a robust board succession plan, you can ensure that your organization remains well-governed and positioned for long-term success.
Consult our board buyer’s guide to discover how our board management software can improve your board’s performance and help streamline your board of directors succession planning process.
FAQ
How can we identify potential future board leaders?
Identifying potential board leaders requires a proactive approach. Here are some key strategies:
- Skills gap analysis: Regularly assess the board's current skillset and identify any areas where additional expertise may be needed. Consider factors like industry knowledge, financial acumen, legal background, and technological fluency. This analysis helps define the ideal profile for future board members.
- Succession matrix: Develop a matrix that maps current board members' terms, expertise and leadership aspirations against the identified skill gaps. This helps visualize potential vacancies and ideal candidates to fill them.
- Diversity and inclusion: Seek a diverse pool of candidates with a variety of backgrounds, experiences and perspectives. Diversity strengthens the board's decision-making by fostering more inclusive discussions and challenging assumptions.
Where can we find qualified candidates?
Several avenues can lead to qualified board candidates:
- Current board members: Leverage the existing board's network. Encourage board members to identify potential candidates from their professional circles who align with the organization's values and skillset needs.
- Executive leadership team: The CEO and other C-suite executives may have valuable insights into qualified external candidates with relevant experience.
- Industry associations and professional networks: Look for individuals with strong reputations and relevant expertise within industry associations or professional organizations.
Executive search firms: Retain a reputable search firm specializing in board placements. Specialists have access to a wider pool of candidates and can efficiently manage the search process.
How can we cultivate future board leaders?
Once potential candidates are identified, active development is crucial:
- Board observer programs: Invite high-potential individuals to attend board meetings as observers. This allows them to gain firsthand experience with board dynamics and decision-making processes.
- Mentorship programs: Pair potential board members with experienced board members. Mentors can provide guidance on board governance best practices and help navigate the intricacies of the role.
Board committee participation: Offer qualified non-board members the opportunity to participate in specific board committees focused on areas where they have expertise.
How can we assess a candidate's suitability for board service?
A thorough assessment process ensures you select the most qualified candidate for the board. Here are some key considerations:
- Skills and experience: Verify that the candidate possesses the essential skills and experience identified in the succession plan. Look for a proven track record of success in their respective fields.
- Integrity and judgment: Assess the candidate's character, ethical principles and ability to make sound decisions under pressure.
- Commitment: Gauge the candidate's willingness to devote the necessary time and effort to effectively serve on the board.
Strategic thinking: Evaluate the candidate's ability to think strategically, consider long-term implications and contribute to the organization's future direction.
How can we integrate new board members effectively?
Onboarding new board members ensures a smooth transition and fosters their successful contribution to the board. Key elements of effective onboarding include:
- Comprehensive orientation: Provide new members with in-depth information on the organization's history, business model, governance practices and strategic priorities.
- Mentorship: Assign a current board member as a mentor to guide the new member through the initial stages of board service.
- Committee assignments: Gradually integrate new members into relevant board committees based on their expertise and interests.
Ongoing training: Provide ongoing training opportunities for new members in specific areas like board governance, financial reporting and risk management.
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