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The most common Board recruiting mistakes

When Russian companies declare that they have a board of directors, it often turns out that it consists of the owner and hired top managers who have been working in the organization for a very long time. However, even the most excellent strategists are unlikely to bring something new to the business if they have been working with it for 15-20 years. The lack of independent directors on the board is the biggest mistake organizations make.

By Marina Tarnopolskaya, Managing Partner, Kontakt InterSearch Russia

When Russian companies declare that they have a board of directors, it often turns out that it consists of the owner and hired top managers who have been working in the organization for a very long time. However, even the most excellent strategists are unlikely to bring something new to the business if they have been working with it for 15-20 years. The lack of independent directors on the board is the biggest mistake organizations make.

Based on our cases, let us highlight a few more common misconceptions when forming the board.
First mistake: inviting those who implement projects, rather than initiate them
The most common mistake is to think that every employee of a company that is known for a breakthrough or a specific project has implemented this very project.

Case. An industrial company was planning a transformation and was looking for a leader to the board of directors who could improve operational efficiency. One of the candidates was a director of operational efficiency well-known in the market, who was invited for an interview thanks to a highly successful project. However, during the interview it turned out that he "picked up" the project, and the idea itself was developed without his participation. Of course, this experience is not relevant to this board of directors.

You need to look for a person who really was the ideologist of changes. And it is not always the one who was directly involved in the launch. It is important that a person, having heard an idea, can make it work.

You can check the role of the candidate in the implementation of the project by asking a number of questions: What was the task? Who owns the idea? What steps were taken? What was your role in this project? How do you assess your role in the project? What conclusions have you drawn? and etc.

The second option for checking a candidate is through recommendations. You should contact several colleagues who can confirm the information. It is important to collect recommendations not only from top officials, but also from those who worked / are working with the candidate in parallel and under him/her.
Second mistake: not realizing the need for change
Companies often do not realize they are at a dead end. Signs that a change in the board of directors is needed:

  • You are losing market share.
  • You are far behind competitors and do not understand what is the matter.
  • You have decided to implement a new project, but have been standing still for a long time.
  • You are planning to implement a project that is unique for your industry, but you do not have the proper expertise.
You can understand at what stage the company is and what changes are worth implementing by studying the literature. Various tools for identifying current problems and their elimination are presented in the books:

  • "The Five Dysfunctions of a Team", Patrick Lencioni;
  • "Tribal Leadership", John King, Dave Logan, Halee Fischer-Wright;
  • "Who: Solve Your #1 Problem", Geoff Smart, Randy Street;
  • "Blue Ocean Strategy", W. Chan Kim, Renee Mauborgne.
Use networking to get critical external feedback. You can reach out to competitors if your relationship is open and warm enough, or you can chat with property owners in your industry. Look at whom you trust, and ask to assess your performance and name strengths and weaknesses.
Third mistake: setting the goal incorrectly
In most cases, it happens that the company is unable to determine what competencies are lacking. It makes sense to turn to specialists who will look at the situation from the outside, and only then start searching for candidates. External evaluation is fundamental and provides more valid data.

Roles in any board of directors are distributed among its specific members: strategists, analysts, experts, product specialists, etc. It is necessary to change the board of directors, focusing on what new goals the company faces and what roles are missing.

Companies often face a lack of financial resources to attract an external specialist. However, it is people who implement projects that ultimately bring profit. If there are not enough resources to change the team, then it is worth postponing the launch of new projects.

Case. There are often situations when a new person is not needed at all. Once we were approached to find a member to the board of directors – a product marketer. After conducting the assessment, we realized that the person developing the products was already on the team, and we asked the owner to choose a candidate from among the current employees.
More mistakes
There are a few more seemingly obvious mistakes that companies often make.

1. Focus on international companies
Many decisions are initiated by the international office without the participation of the head of the Russian one. It is not a fact that he or she can handle a similar decision in another company and his/her experience in strategy creation will be relevant.

2. Limit the search to the industry
A person who does not work in the industry, but has a strategic vision and analytical skills, will be able to bring a unique experience that expands the horizons of the industry.

3. Limit the search to the region

To solve the problem of entering a new market, it is enough that the candidate has experience of working in a country with a similar mentality, as well as has cases of launching products on the international arena.

4. Not to conduct an assessment
To test the strategic thinking and other soft skills of candidates, it is necessary to use special assessment procedures: for example, Hogan or Talent Q. Recommendations from managers, colleagues and subordinates will also be useful.

In conclusion, we note that each board of directors is individual, its composition depends on which operational functions work well in the company and which ones work worse. The past year has highlighted the growing role of the board of directors: according to our research, one fifth of companies plan to strengthen their board in the next twelve months. Let us recall the words of an ancient thinker: "When it is obvious that the goals cannot be reached, don't adjust the goals, adjust the action steps". Awareness of the need for a change in the board of directors is the first step towards success.