August 14, 2018
August 14, 2018
Many senior executives enjoy serving on corporate boards, and many successfully find a role. But it’s difficult to determine how to best apply your energy to ensure you find a board placement that fits your skills, schedule, and interests.
If you’re interested in serving on a board, the process can be intimidating. However, it is much more manageable to find a board role by breaking the process down into few key steps: finding the board type that fits your experience and needs, preparing the materials you need for your search, and marketing yourself.
The first step when considering board membership is to look at the type of board that matches your experience.
Public company boards, while certainly attractive, may not be the best target for newer candidates. As the Wall Street Journal recently reported, there are now only 3,671 public companies in the U.S.—down from 7,332 in 1996 following heavy merger-and-acquisition activity. Public companies have larger boards, with an average seven outside directors, yielding a target universe of 25,000 seats and an average annual turnover of perhaps 3,000 seats.
What does this mean? As a practical yardstick, there are currently more than 19,000 NACD members. Don’t count on 90 percent being uninterested in boards and leaving a seat to you!
By contrast, according to Private Equity Info, there are 16,800 private equity portfolio companies, almost all with a board of directors. These boards are typically smaller, with just two or three independent directors, yielding a universe of about 40,000 board seats—67 percent more than public companies. This raw math should be an eye-opener for many executives looking to land a seat at the board table.
When thinking about public versus private, consider the following example: When PepsiCo (my alma mater, where I gained the best training and experience) needs an outside director, they will likely engage an executive search company. The hunt may then funnel down to sitting CEOs and chairs of other Fortune 50s. By contrast, private equity boards are less concerned with finding a marquee name and simply go out and find two or three terrific people—only 22 percent of private equity portfolio companies’ outside directors are sitting CEOs, meaning many non-CEOs in those seats.
I’m certainly not suggesting you can’t make it onto a public company’s board. Rather, it’s a game of odds, and it’s important to make the best use of your time.
Getting your marketing materials ready is a must before embarking on any campaign for a board seat. This includes five core materials:
An outbound marketing campaign takes work, and there is no easy way out. Begin with making your board interest known to, say, 50 people you know well. While this might seem excessive, remember that each person might have only a 10 percent chance of hearing about a board need and also be in a position to nominate you.
Before you say you don’t know 50 such people, think about:
Next, network with as many private equity firms as you can. Every new deal means a board needs to be created, and that spells a need for two or three new independent directors. For example, Riverside Company bought 24 companies in 2011 — creating an immediate need for 48-plus outside directors.
If there are two messages here, they are that you need to carefully put together your messaging before entering the marketplace and that you should put some serious time into considering the private equity sector. After two tours of duty as a PepsiCo division president, I have found the private equity world to be extremely engaging, stimulating, challenging, and financially rewarding as a portfolio company CEO, an operating partner, and a board member.
Mike Lorelli served two PepsiCo division president roles before segueing to private equity. He has led engagements for Riverside Company, Rutledge Capital, Falconhead Capital, Pouschine Cook Capital Management, and Argosy. He is currently an operating partner of Falconhead Capital and on the boards of Rita’s Italian Ices, CP Kelco, KPI Soft, and iControl.