A well-funded startup, a boffo IPO, happy employees and customers and maybe a patent or two: Tech offers many markers for success. Here’s another one: A seat on the board of a private or public company.
It’s exciting, it carries a lot of cachet — and it’s a big responsibility. “We are ultimately in charge of protecting and representing the shareholders,” said Hope Cochran, managing director at VC fund Madrona Venture Group, Seattle, and co-chair of OnBoarding Women, a Seattle-based business-run education and networking group that helps executive women prepare for board seats. The percentage of women on Washington State boards was 27 percent in 2020, up from 14 percent in 2014, the year OnBoarding Women was launched.
Cochran, who serves on four boards, got her first invitation in 2016 from toy company Hasbro. “I was thrilled to get the call,” Cochran said, adding that such invitations signal that an executive has arrived. “You’ve done things in your career that are impressive,” she said.
Corporate Directors in a Nutshell
How You’re Chosen
Boards start the process by identifying skill gaps in their current composition, then develop a job specification and start looking for candidates. Sometimes boards use search firms to find candidates; mostly, they rely on networks and referrals, said Megan Wang, COO at The Boardlist, a service that connects corporations and potential board members. Platforms like The Boardlist and OnBoarding Women, a Seattle nonprofit that helps place women on corporate boards, are also sources for companies.
Why You’re Chosen
It’s all about expertise and what you as a tech professional can bring to the board.
Amy Cappellanti-Wolf’s HR experience led her to a seat on the board at Softchoice, a Toronto-based cloud solutions and digital solutions and services provider that went public earlier this year. The company, which identified her through a Boardlist connection, contacted Cappellanti-Wolf during the pandemic, when it became clear the business world would soon need new ways to manage people.
“I loved that Softchoice is a people-intensive business and they saw the value of recruiting a board member with a passion for and expertise in human resources,” said Cappellanti-Wolf, chief people officer at Cohesity, a San Jose, California-based data management company.
Hasbro tapped Cochran for board service because of her background in digital gaming and her financial expertise. Knowing exactly why she was asked to serve on the board helped her get grounded in the recruitment process, said Cochran, who was a CFO when she joined the Hasbro board.
How to Join a Corporate Board
- A career with successes and failures that taught you expertise in a field is the best way to get noticed and get that call, said Hope Cochran of Madrona Venture Partners.
- Create your value proposition. Write a resume that summarizes your passions, skills and what a board might gain from your service. “In short, why is the CEO going to call you for advice?” said Megan Wang, COO at The Boardlist, a service that connects corporations and potential board members.
- Network. Share your board aspirations with your network, because the majority of board opportunities happen through recommendations and referrals, Wang said.
- Join an advisory board. That kind of service can familiarize you with how boards work and with corporate governance. Nonprofit board service can help, too.
- Work a program. Create a candidate profile on The Boardlist, OnBoarding Women, or a similar organization.
- Prepare to wait. It’s a journey that can take a few months or as long as two years. “Board service is a commitment, so we often recommend taking the time to find the right fit for you,” Wang said. “You’ll continue to learn more about yourself and your interests along the way.”
Corporate boards have historically looked to the C-suite, particularly people with operating and P&L experience, to recruit new board members, said Wang. These days, they’re also looking to senior and executive vice president levels.
One reason: Skill sets. People with cybersecurity, marketing, mergers and acquisitions and other specialized skills are often in the executive or senior vice president level, she said.
Another reason: Diversity. Given the lack of such in corporate America’s C-suites, despite recent strides. White men hold 59 percent of board seats overall and women, 40 percent of all board seats, according to search firm Heidrick & Struggles’ 2021 U.S. Board Monitor report.
Some states, for instance California, now require publicly traded companies headquartered in the state to have diverse boards. Illinois requires public companies to report the gender and racial makeup of their boards. NASDAQ-listed companies must disclose board-level diversity and also have at least two diverse directors or explain why they do not.
Mandates, in addition to 2020’s calls for racial justice and equity, have resulted in the appointments of many first-time directors and executives without C-suite titles. In 2020, 38 percent of board appointees had no prior experience, compared with 28 percent in 2019, according to search firm Heidrick & Struggles’ report. The appointment of CEOs and CFOs to boards fell to 51 percent from 62 percent in 2019.
The Interview Process
It’s not quite like a job interview, Wang said: It can last longer, up to a year, as the need to fill a board seat usually isn’t as urgent as it is to fill a professional post. “Interviews typically feel like conversations as the board is not only trying to assess the skills that a candidate brings to the table but also their character and integrity,” she said.
Expect a few rounds of interviews with the CEO and other board members, as well as a reference check and a background check.
If you’re new to corporate board service, you’ll need some training. Public and bigger private companies generally have a formal onboarding process. Some also have a buddy system that pairs older board members with newer ones. “This person can help get the new director up to speed on the board’s dynamics, key company issues, historical context and more,” Wang said.
Some companies onboard more informally, with a deck from the CEO that introduces new board members to the company.
Alissa Hsu Lynch, who went through OnBoarding Women’s board preparation program, joined the board at Pulmonx, a Nasdaq-listed medical device company, in July of 2021. It’s her first public board seat; she also serves on nonprofit and private-company boards.
Lynch was placed on Pulmonx’s audit committee and attended several meetings before the first formal board meeting. “That was a nice way to start to learn about the company and get involved and engage with other directors,” said Lynch, global lead, medtech strategy and solutions at Google Cloud.
Lynch had one-on-ones with each member of the executive leadership team, and Pulmonx provided her with an onboarding coach from the National Association of Corporate Directors, so she felt fully comfortable by the time she attended the first full board meeting.
However onboarding happens, Wang urges new board members to prepare for their first meeting. Read materials beforehand and come up with questions, and ask the CFO or CHRO for more information if necessary. With board meetings only a handful of times a year, “it’s important to be prepared with a full understanding of the current state of the organization before taking your seat at the table,” she said.
Hope Cochran suggests doing more listening than talking at the first meeting. “You do want to kind of observe and listen and understand the dynamic of the people in the room and where the organization is,” she said. “You don't want to come in and be overly opinionated about things.”
What It’s Like to Serve
Corporate boards provide governance over a company; the board is in charge of protecting and representing shareholders. Board service “is a significant commitment, and it can’t be underestimated,” Cochran said.
Cochran devotes about 200 hours a year to each of the boards on which she serves, with the time spent preparing for and attending quarterly board meetings, plus service on board committees, such as an audit committee or search committee if an executive needs to be replaced.
Board service differs at public and private companies. Those at private companies, especially startups, are more hands-on and operational, while public company board service involves more oversight.
That’s something Cappellanti-Wolf had to become accustomed to when she first started attending board meetings. “I really had to change my mindset because I’m not operating this business,” she said. She learned that board meetings are more about asking the right questions than serving up the right answers.
Unlike nonprofits, where board members donate or raise money for the organization, corporate boards pay directors for their service. Median compensation for directors at private companies was $42,750 in 2020, according to research from consulting firm Lodestone Global. Average compensation for a director at an S&P 500 company was $312,279 in 2021, according to search firm Spencer Stuart’s Board Index report.
Compensation can range from pure equity (stock or stock options) at private companies to a blend of cash and equity at public companies. Cappellanti-Wolf experienced both: When Softchoice went public in May of 2021, her compensation shifted from equity to a mix of cash and equity. “Once a company goes public, the compensation for board service tends to expand from pure equity to a balance of equity and cash,” she said.
Benefits of Board Service
Those who serve say the benefits extend way beyond money. “I am surrounded with fabulous, brilliant people,” Cochran said. “I can see trends at other companies and take learnings from one company to another, so it broadens my horizons as an executive.”
“It’s actually quite fun to sit on a board and look at a business not from an operator’s perspective, but more from a director’s: How do we help drive strategy and governance and mitigate risks?” said Lynch, the Pulmonx board member. “I love to learn and board service is different from a full-time job.”
Another benefit: Networking. “If I want to serve on other boards in the future, it’s great to have a broader network,” Lynch said.
She describes board service as a journey. “I was told that getting the first seat is the toughest, and after that, more opportunities come through.” To get the journey started, Lynch recommends thinking about your brand and what you’d bring to a corporate board. Network to get your name and interest out there, and then be patient. “Board seats don’t open up left and right,” she said.
But as is the case with many things in life, chance favors the prepared.