The Keys To Building A Better Board
Diversified Search CEO Dale E. Jones sat with Editor in Chief Dan Bigman to discuss issues around board recruitment for the Fall 2018 issue of Corporate Board Member magazine.
Diversity has become a hot topic for boards. Why is board diversity so difficult?
Unlike in Europe and other places, most U.S. boards don’t have term limits, so as a result, you don’t have as much fluidity around the movement of individuals off boards in order to bring new blood into the boardroom. I serve on a boarding where there are term limits. It gives the CEO and the chairman the opportunity to bring in fresh thinking that’s relevant to the marketplace, as opposed to individuals who are going to serve on a board for 30, 40 years.
Are there other parts to it, in terms of getting the board to be more open?
Most boards today must do an evaluation about the critical competencies that are missing, and often those have to do with industry and functional expertise. Some companies aren’t creative enough to go outside the box to think about the people who are not on the radar screen who ought to come in and add value to this perspective. We talk about the issue that are missing, and often those have to do with industry and functional expertise. Some companies aren’t creative enough to go outside the box to think about the people are not on the radar screen who ought to come in and add value to this perspective. of women in boards today, ideas of though. Sometimes boards can get stuck in their own way and not widen their nets to find people who can bring those critical skills and mindsets.
What stumbling blocks do boards face trying to bring more digital talent on board?
One of the challenges is to find people who are on the cutting edge of the digital revolution today. Too many times, we go to the CIO. She or he may have been in their role for 25, 30, or 40 years. They’ve not been on the cutting edge because technology has changed. So, it’s important to think about chief innovation officers, chief digital officers and people who understand disruption and consumer insight.
Is there a certain amount of, shall we say, embarrassment that gets in the way of recruiting digital natives who are more well versed in digital technology?
I think there is. There are a number of directors today who are legacy executives who’ve been in roles in the past and the world has changed around them. Many of them are great at assessing risk and safety and stewarding governance, but some have not been on the cutting edge of this new age of digitization. Some don’t understand cloud computing, 3D printing, machine learning or artificial intelligence. So much of that is changing the landscape of business today, and boardrooms are starved for people who have this digital literacy that’s so front and center of the revolution we’re experiencing in the marketplace.
How do you work with directors to get over these recruiting hurdles?
We talk about what skills are already present in the boardroom and what is missing related to the strategy, and the focus of the business. Often, digital literacy is missing because people haven’t had to live in that world before. Jack Welch talks about the fact that if the external rate of change is greater than the internal rate of change in your organization, then you’re probably headed out of business. We’ve got to bring in people who understand that the world has changed in epic proportions. Boardrooms are starved for people who understand exponential thinking in this new world of disruption. So we’re looking at startups, at people on the cutting edge of the revolution that we’re experiencing, the biggest since the Industrial Revolution. Our boardrooms today are filled with people who don’t understand that. Nokia had 80 percent of the market years ago. Where is it today? Amazon is eating everyone’s lunch. Some board directors are not in touch with the new reality.
You were recently involved in a high-profile board turnover at Wynn resorts. How did you go about bringing on three female board members in the wake of the CEO and chairman’s resignation?
Companies are challenged at different levels, regardless of the issues faced. The role of a firm like ours is to help clients think through how they become better at what they do and resolve the challenges and tensions they feel in the boardroom. Wynn made some decisions about its direction and trajectory long before calling us to say, “We want to do the right thing for the right reason to create the right impact in the marketplace.” It made our job easier. Diversified Search is the largest woman-owned firm in the country today. The whole issue of diversity inclusion is part of our DNA. Our consultants led the charge to find extraordinary women in the marketplace who would come in and take a leadership role on the board. But it really starts with Wynn. We just become the partner to help find the right team to come into the boardroom and to add great value.
How do you go about that?
You have to have a narrative. For Wynn, it was a new narrative about not what they were in the past, but what they wanted to be and where they are today. We’ve become storytellers of a new narrative of corporations and businesses that are looking for the right people to come and add value. We begin to tell that story to the right team of people who have the skills and the character to follow into a role like that. Then we began to recruit them to a new narrative about why they should join a certain board for certain reasons – regardless of what may have happened in the past.
This Q&A first appeared in the Fourth Quarter 2018 issue of Corporate Board Member magazine. For a video of Dale Jones’s interview on this topic with Editor in Chief Dan Bigman, click here.