Article originally published in CEO Weekly September 19, 2023
In most companies, the CEO is the most visible figure, and many people think they are the highest authority in the company. While CEOs do wield a lot of power and are in charge of making top-level management decisions, they typically report to the board of directors, which is a group of individuals who provide oversight, governance, and strategic guidance to the organization. Having a board of directors is required for publicly traded companies, but many private and non-profit organizations also have boards.
The board acts as a fiduciary, or trustee, for the company’s shareholders and stakeholders, ensuring that the company is managed effectively and in the best interests of its owners and the broader community. It usually also has the authority to hire and fire the CEO and other senior management figures in the company.
Boards are composed of executive directors, who are responsible for the day-to-day management of the company, while non-executive directors are selected to bring outside perspective to the organization, usually due to their extensive knowledge and experience in the industry. While some non-executive directors may represent shareholders of the company, an independent director is a type of non-executive director who is not an employee of the company, allowing them to provide unbiased judgment on issues.
According to Steve McKinney, founder and president of executive search and coaching firm McKinney Consulting, individuals wishing to climb the corporate ladder usually set their sights on becoming a CEO or other C-suite executive. However, becoming a board member is also another leadership path individuals can take as they advance their careers.
McKinney has extensive experience on boards of various organizations, having been a board member and governor of the American Chamber of Commerce in Korea. He is also currently a board member of the Korea Foreign Schools Foundation and serves on the Kestria Institute Council of Kestria, the world’s largest executive search alliance, with members in more than 40 countries.
McKinney is also a member of the Virtual Advisory Board (VAB), an organization that connects its members and helps them navigate the global board of directors and advisory board ecosystems through education and peer-to-peer training. He says that VAB estimates that 80% of all board positions are appointed as a result of networking, but he believes that the proportion is even higher, as he says that building networks of professional relationships and a positive reputation in the industry are among the top factors that influence being selected for a board position. Having a positive reputation is especially important today, in the age of the internet and social media, where everything about a person can easily be looked up and it’s harder to hide controversies.
Having relevant industry experience and expertise is extremely important to become a board member. This experience can come from working in executive roles, as an entrepreneur, or in other leadership positions inside and outside the organization. Skills and knowledge relevant to board service, such as financial literacy, strategic planning, risk management, and governance will also improve the chances to be selected as a board member. There are also board governance education and certification programs available to improve one’s knowledge.
McKinney says that there is a rising demand for independent or outside board directors, who bring a fresh perspective into an organization. There is also a push among industries and even governments to increase the diversity of boards by growing the number of women and other minorities to reflect the changing demographics of business and the workforce.
“There have been studies that companies with more women on their boards tend to perform better than all-male boards,” McKinney says. “The same is true for more ethnically diverse boards, which will greatly benefit the organizations they serve. While you need someone who’s mature, smart, and has leadership skills, it’s important to have a diversity of backgrounds and viewpoints represented on the board.”
Having been in the executive search industry for more than two decades, McKinney has worked to place board members for various organizations numerous times. He says that placing board members can sometimes be particularly complicated, as a candidate’s fit with the rest of the board members needs to be considered, and that they’re able to bring new skills and strengths to the table.
McKinney says that individuals who aspire to become board members can start by taking up voluntary or unpaid board positions at organizations, such as nonprofits, that deal in an area that they are interested in. This will allow them to gain vital experience and have a taste of how to serve on a board, as well as having an attractive entry in their resume. In the future, they can apply for compensated positions at larger organizations in their field or industry.
McKinney is an American executive with extensive experience working in the South Korean market and, at one point, was one of the few non-Koreans holding a government position in the country. Boards in Western organizations are typically more open and have more free-flowing meetings. On the other hand, Korean organizations’ boards are more structured, and the chairperson usually sets the agenda for a meeting, and the board largely sticks to it.
“Corporate culture in the boardroom is crucial, as it dictates how board members interact with each other and how the organization functions. I would advise people to get a sense of the culture and atmosphere of a board that they want to join in advance. This will allow them to adjust as required,” McKinney says. “The most important thing is to have passion for the product or service that the organization represents, if you don’t your hurting rather than helping. Passion for me, is the greatest indicator that someone belongs on a board, often greater than experience or seniority”