Dr. Earl R. Smith II

Dr. Earl R. Smith II
DrSmith@Dr-Smith.com
www.Dr-Smith.com

My work with boards – both for-profit and non-profit – often involves an assessment of a search for new leadership. Strong, focused leadership is an essential part of any organizational success. This is as true for boards of directors as it is for senior management teams.

If a task is to be completed is requires order, direction and action. Organizations are formed to accomplish tasks. For-profit companies form boards to protect and enhance shareholder value. Nonprofits are formed for a variety of reasons usually centered on a central mission. Whether the organization is formed for-profit or nonprofit, accomplishing tasks, reaching goals or carrying out missions, boards and organizations must have effective leadership. Without such leadership, getting started is difficult, and sustaining the effort is nearly impossible. Understanding the steps to succeed becomes an exercise in futility.

Forming a board requires determining the appropriate governance model for the organization. Professional governance models use a series of committees to manage different facets of the organization. Boards generally will establish a business strategy to address the core of the business model. Committees, such as the Succession committee, the Audit committee and the Governance committee will pick up the strategy and actually carry out the work as the board delegates. Standing committees will have established meeting dates, budgets and authority to engage advisers as needed to carry out their delegated duties.

The function of the Nominating committee is to ensure adequate talent is available to the board to execute the strategic plan. Nominating committees must have the tools to recruit highly effective board members. The first step to successfully recruiting board members is for the board Chairman to appoint the right members to the Nominating committee. The Chairman should appoint directors with adequate board experience to understand the issues the board will face, with insight into how the board functions, and with collateral material to effectively address questions potential board candidates will inevitably have regarding the board’s strategy. Effective Nominating committees will maintain a list of potential candidates with various skills and talents. Once a board seat is vacant, the Nominating committee will settle on candidates with the necessary skills to fill the seat based upon the needs of the board at the time of the vacancy.

Succession committees establish the order of authority on the board and in corporate management. The Succession committee must understand the role the board Chairman plays in providing direction and continuity. Firm, stable leadership ensures mistakes are not repeated, and an effective and vital corporate culture is upheld. In working to provide stable corporate leadership, the Nominating committee and the Succession committee should work in tandem. Each new candidate should add to the board’s effectiveness. The Nominating committee should always seek out the best available leadership to join the board. The Succession committee should effectively communicate to the Nominating committee the needs it sees in the future. Both the Nominating committee and the Succession committee should understand the needs of corporate management for directors with an understanding of the industry and the corporate strategic plan. Leadership styles must also mesh both on the board and with corporate management.

New directors should have skills that complement the board and the corporate management. Leadership development programs and coaching programs can allow a company to grow leaders from within the organization; however, Sarbanes-Oxley requires an independent board for public companies falling under the Act. Nominating committees must seek out directors with leadership ability and a willingness to commit to a personal development regimen to learn the business. Leaders willing to make this commitment will learn the business and understand the corporate strategic plan. Leaders will provide the direction for corporate management. Leaders will also demand action from corporate management and hold the management team accountable for execution of the plan. A board with focused, committed directors will provide the leadership to corporate management to exceed the expectations of stakeholders, stockholders and investors.

© Dr. Earl R. Smith II

Related Articles:

• Nomination Committee Strategies
• Characteristics of a Task Oriented Director
• New Board Member Selection
• Officer and Director Vetting
• Board Succession Planning – Two Tiered Candidate Criteria
• Good Governance – The Chairman’s Role

Dr. Smith is a proven senior executive, successful entrepreneur, published author and public speaker. He serves on boards of directors and advisory boards or as a strategic adviser to CEOs. Dr. Smith specializes in turnaround management, strategic planning, leadership development and executive coaching. He also works as an executive and/or life coach in the areas of personal growth and spirituality. He is the author of Amazing Pace: Turbo-charged Business Development – a book that shows how Advisory Boards can dramatically increase revenue. Dr. Smith is also the author of Dream Walk: Parables for the Living – a book of Raven Tales and exploration.

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