Guest post by Chris Clark, Publisher of NACD Directorship
The attributes for securing a public company board seat are personal reputation, industry knowledge and increasingly global experience. And sometimes it helps to have worked at one of the Big Four.
In my travels as publisher of NACD Directorship, I frequently have the pleasure of meeting recently retired accounting partners who, for the most part, all want to become public company directors. I’m seeing an increasing demand for insight on how to become a corporate director. I have gone Switzerland on this subject and have asked three leading recruiters to share their insights with you.
Chris Clark: In general, where do retiring partners of accounting firms rank amongst all board candidates in terms of priority/desirability?
Arun Dhingra, Co-leader, U.S. CFO practice, Egon Zehnder International: When seeking board candidates, nominating committees consider a mix of factors. Given the expanded responsibilities of audit committees, retired accounting firm partners, with their financial expertise, are much sought after. Combine that with vertical industry experience and they are highly desirable board candidates.
Clark: Does the demand differ greatly when looking at a Big Four firm partner versus non-Big Four partner?
Dhingra: While Big Four partners may have greater name recognition, when it comes down to it, it’s really the expertise and the clients served that are most seriously considered by the nominating committee.
Clark: In either case, what qualities or career achievements would put an accounting firm partner significantly ahead of his/her peers?
Dhingra: Personal reputation in the market always comes first. Then it’s finding the right match between what a particular board is seeking in experience and skills and what an individual candidate has to offer. But some big accounting firm partners, who have honed their expertise on accounting committees, such as the FASB, may be even more desirable as candidates for the audit committee.
To learn more about becoming a better director candidate, take NACD’s multimedia How to Be(come) A Director course.
Clark: Do you believe writing articles for well-known media platforms, networking at director conferences, contacting a major recruiting firm, or directly approaching chief executives and directors within one’s own network is most effective in their quest to become a public company director?
Dhingra: Making one’s name known in the marketplace can certainly help but, at the end of the day, it’s the specific skills sets that will both get the attention of the nominating committee and make one an effective director.
In turn, I posed the same basic questions to Nels Olson, vice chairman and co-leader, Board & CEO Services, Korn Ferry International…and his answers differ a bit from those of his peers.
Olson: Accountants have a unique skill set that gives them unprecedented access to multiple aspects of the workings of a public company’s board – including regulatory issues, governance, risk and strategy. Generally, the most desirable candidates from the accounting firms tend to be among the top four or five senior partners at a firm. These senior professionals usually have an excellent track record and board-level experience that is invaluable for board effectiveness. And, of course, SEC regulations require that the chairman of the Audit Committee have accounting or related financial management expertise. At least one member of the audit committee is expected to be an “audit committee financial expert” as defined by the Commission. So, it makes sense when you look at the leading multinational public companies that the majority have at least one accountant on the board.
Partners from the larger accounting firms are more desirable candidates for board positions because they typically have a high level of visibility with boards through their work and have likely worked with multinational companies, directly with the most senior executives in many cases. The Big Four partners are also more likely to have international business experience – an area of experience that many public company boards now consider critical.
The key areas to develop in order to enhance the chances of successfully being recruited for a board position are practical experience and developing a strong network of contacts. Ultimately, boards are looking for new directors who are, a) proven in a given sector with experience of the latest issues, and, b) familiar with the company, its history of decision-making and strategy and its particular governance and risk issues. Other qualities include experience of working with large, multinational companies on critical issues, such as governance, risk and strategy; and specific sector expertise.
Yes, it is essential that an accounting partner employ as many of these tactics as possible in order to introduce his or her skills to a broader universe potential public company board directors. Accountants have a significant advantage in preparing for a directorship position, when compared to other professionals, in that they have a mandatory retirement age of 62. This allows them to hone their profile and skills in the run up to retirement and then join boards at a relatively young age – which can be very desirable for some companies.
Thought leadership positioning is an effective way to showcase a candidate’s point of view on critical board-related issues and display an understanding of the current business tactics related to public company accounting. Developing one’s own network of supporters and advocates is as vital as ever. Boards still to this day first ask their own contacts for recommendations for board members before casting a wider net. By leveraging relationships with industry-specific publications and general business publications – accounting partners can “manage their brand” as it relates to their expertise. A well-written article can serve as a calling card that could open doors to future opportunities. Working with a leading recruiting firm will help broaden a candidate’s universe of opportunities and also provides consulting services, such as leadership assessment and training, which can help candidates recognise their value and understand where their skills will be best served.
Successful board members are the ones that can advise on the regulatory issues and other risk factors critical to business operations. In an ever-changing business environment, it is important that accounting partners have broad experience of the issues affecting the marketplace – whether it’s regulatory or governance issues, risk management or strategy development. Developing these skills with existing clients is a useful exercise.
And finally, seeking board positions on non-conflicting organisations such as non-profits, alumni associations at prestigious business schools, can all help gain valuable board-related experience prior to retirement, as well as building a network of other directors.
Last, but certainly not least, Michele Heid, managing partner at Heidrick & Struggles, cuts to the chase.
Heid: When it comes to securing financial expertise, boards can examine several routes. Certainly one path to securing a board member with strong financial fundamentals and acumen is to seek a retired accounting partner. However, if the company seeking a board member is audited by the same public accounting firm where this individual retired, this individual must have had a three year hiatus to be considered independent.
In general, there is a slight preference to those from a Big Four firm due to exposure and size of their client base and the experience gained from that. If the partner comes from a large regional firm, they would have some of same experience. However, Big Four experience generally provides more specialisation with regard to industry, as opposed to a generalist coming from a non Big 4 background. Someone with this in-depth knowledge of industry provides more perspective and is considered more desirable.
With regard to qualities, certainly, leadership and integrity are a given. Beyond that, with regard to career achievements, I would say a couple of things. One is they have managed some of the large, global accounts so have had exposure to the boards of those companies, as well as significant exposure to the senior management team. Also, any experiences where they have been involved beyond just audit advisory services is heavily considered. Experience with M&A, deal structuring, and exposure to capital market transactions bring a perspective beyond just a pure advisory audit partner.
Networking obviously makes it known that you would like to join a board. Most board searches are initiated by the Nominating and Governance Committee, so familiarity with existing board members is helpful. In addition, all major recruiting firms, including Heidrick & Struggles, have a board practice, so connecting through those contacts is also useful.
Staying active, even if retired from a public accounting firm. Make sure you are current on the regulations and up-to-date on your field of expertise. With regulations constantly changing, a retired partner needs to remain current to add the value a board seeks.
Well, there you have it. Personal reputation, sector expertise, and multinational company/global experience are the key threads.
Good luck my friends, stay hungry for that first directorship.
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