Finding Diverse Candidates for ESOP Boards
Many ESOP companies are looking to diversify their board membership but have a hard time knowing where to look. Board members tend to come from existing networks of CEOs, and tend to be older white males. Research shows that cognitive diversity on boards leads to better decisions. Board members who can think differently about issues and who are willing to challenge existing norms can help companies move forward. Demographic diversity does not guarantee cognitive diversity, but it may help. For many companies, of course, diversity is a goal in itself even if it does not lead to different decisions.
Good board members also tend to have adjacent skills and not just replicate what already exists within the board and/or management. Adjacency allows board members to bring ideas and perspectives not so different as to be impractical but not so similar as to be of little value. An adjacent board member might be able to identify a new business area to enter, a different marketing strategy, a more effective culture, or a different way to organize work, for instance. Finding these adjacent people is often more likely outside your existing network.
The NCEO is working with two organizations that may be helpful in finding board candidates, Women for Economic and Leadership Development (WELD) is a 501(c)(3) national nonprofit organization. Founder Barbara Smoot says “WELD provides for-profit board training and certification in government boards and commissions governance. Our programs attract a diverse base of executives across industries, ethnicities, age and geography. This base generates a strong board-ready source of candidates. Companies seeking board members may send descriptions of needs and WELD will provide bios of prospective candidates that align with those needs.” Requests for assistance can be sent to Barb Smoot at firstname.lastname@example.org.
We're also working with the Private Directors Association, and organization that works through local chapters around the country and provides training and networking for directors. Its mission is “creating, sustaining and enhancing Private Company value through the active use of Boards of Directors and Advisory Boards. We advocate for excellent practices in board formation and governance. We provide a national network where executives and professionals interested in board service can find and meet with those interested in securing exceptional board members.” The organization has a commitment to encouraging diversity. It also has an active ESOP subgroup.