Professional search process for members
of the board of directors
1) Formulating a role description
To begin with, the skill field that the board member will be responsible for must be defined. This also requires defining potential nominations for board of director committees, strategic challenges, as well as time commitment
and remuneration.
2) Creating an exact requirements specification
The requirements specification must include the skills that the board member should possess (specific professional and management experience, industry knowledge, market experience etc.). A useful balance of different skills (competence matrix) among the board of directors should be ensured (entrepreneur, manager, stakeholder, politician, etc.).
3) Forming a nomination committee
Forming a specialist committee can be useful in a larger board of directors. This can be identical to the normal nomination committee but doesn’t necessarily have to be. Particularly when appointing a presidency role, it may also be helpful to include a representative of a significant shareholder group or an anchor shareholder.
4) Incorporating external professionals
Identifying, approaching and evaluating potential candidates takes a lot of time and requires a professional network, which is why it is advisable to commission external professionals to draw up a longlist of candidates. This also counteracts any particular interests of individual board members, allowing you to find the ‘best of market’ rather than the best among
a circle of friends.
5) Evaluating longlisted candidates
After the nomination committee approves the longlist, the external consultants hold interviews with the remaining candidates to assess suitability and obtain information. Where both parties have expressed their interest following this phase, meetings will be arranged between shortlisted candidates and the nomination committee. As a rule, there tend to be between three to five people. The aim is for the nomination committee to get a thorough idea of to what extent the criteria defined in the requirements specification are fulfilled. The candidates’ motivation and identification with the company and its objectives should also be critically examined. The nomination committee will then suggest a nominee to the board of directors.
6) Reputation review
Before the election, it is essential to assess the future board member’s impeccable reputation. This also entails definitively ruling out debt collection, criminal convictions or pending criminal proceedings. Another aspect that needs bearing in mind is time as a resource. Finally, there should be a risk assessment. It is common knowledge that art. 663b no. 12 CO introduced in 2008 requires the provision of information on the completion of a risk assessment in the appendix of the annual financial statements. In addition to financial and operative risks, the absence of individual board members, particularly the president of the board of directors, can present a significant risk. As a result, succession planning must also be adopted at
board level at an early stage.