In my honest opinion it is encouraging that more and more Indigenous corporations are seeking to appoint one or two independent Directors to their Boards.
While it is important that the cultural priorities and prerogatives of an Indigenous organisation are held up as part of their Mission and Vision, to my mind this is not incompatible with having independent views on the Board. This can provide experience in areas where the Indigenous Board members do not yet have enough experience; can provide specific expertise in areas such as finance, the law and commerce; and can bring with it a wider network to help the organisation fulfil its mission in the wider world.
However, due to the inexperience of Indigenous organisations in finding independent Board members, the process is fraught with danger. What should be the process? How do you actually recruit the right person?
I have been personally involved in some sophisticated Indigenous organisations who even then, have left recruitment to management. The Board needs to be involved, but not necessarily run the process. The Board taking control over the recruitment process is as risky as just leaving it to management – remember, "eyes in, fingers out".
In one example, the selection of an independent Board member was left to the management. The management prepared the role and job description, ran the initial interviews, and presented a short list to the Board, only after which representative of the Board were involved in short-list interviews.
What's wrong with that picture? A variety of things really. Despite the fact that they ran the role and job description by the Board, the guts of the role was already determined in that document, and since words matter, the fact that the Board was only involved in reviewing the document meant that the document already carried the "idea" of what the management was looking for, and in all practicality it would have been hard for the Board to "start again" to change that idea. Then the lack of Board members at initial appraisals of applications meant that management could choose the types of candidates they put in front of the Board as a short-list. While this might seem like a good example of separation of powers, to my mind this allows the management too much ability to influence the types of candidates who were considered.
So how should an Indigenous organisation organise the search, recruitment and appointment of an independent Director? Here are my 5 steps, involving and engaging the Board with each step as much as possible so that they drive direction.
Start with clarity about the role. Identify what skills and experience the present Board members have, and what they can improve on. Build a wish list of the independent Director's skills, how they can help build capacity in the Board and for each individual, what their desired values and personal traits might be. Then from the analysis define their role within the Board differentiating between hard skills (eg Financial expertise) and soft skills (eg patience to build others' capacity), and write their job description.
Plan the whole process before you even advertise. You need to be clear about timelines, who does what, and how decisions are to be made. Sometimes, you may be replacing a resigning Director – don't let the date of resignation drive your timeline, let the timeline reflect what you have to do rather than an imposed and artificial point. Set meeting dates now, in accordance with your timelines, and document the timelines as well as responsibilities and the process for decision-making. This document will allow you to be transparent with applicants about what it will take, as well as ensure that you are managing the process from the start and not reacting to events.
Decide how you are to advertise. Depending on the type of applicant you seek, the method and placement of advertising may be different. For example, if you want a specialist – say a lawyer or an accountant – you may want to contact your networks rather than advertise widely. On the other hand if the type of person is not easily found within a small geographic or industrial context, perhaps advertise in a national newspaper. You may also want to hire a recruitment firm to use their expertise and networks. Think about print advertising (local, state or national), using your networks and their networks, online advertising especially if you can refine the target audience, recruitment consultants, or even approaching directly some people whom you already know.
Prepare an information pack on top of the role and job description. This should include a full briefing on the organisation; who it represents and the cultural context; its history, achievements and challenges; its vision, mission and goals; proposed meeting and work schedules (the Board Calendar); and any relevant policy documents. You not only want to attract the right skills, you want to make sure that they are (corporate) culturally aligned. The information pack should also have ready template letters of offer and confidentiality agreements. You don't want to have to draft these in a hurry.
Create a selection panel. This may be an existing nominations committee or a panel set up especially for this appointment. Ensure that it is made up of Board members who can contribute to assessing applicants, as well as management, and if necessary, consultants. The panel should meet before the advertisement goes live so that they can discuss how they are going to assess applicants, how they will choose the shortlist, and how the final interviews and selection are to be handled. Once again, be ready up front.
During interviews, concentrate on three factors – can they do the job, will they do the job, and will they do the job here. "Can they do the job" is all about their skills and experience. These are questions that confirm qualifications and experience (not forgetting that a due diligence of their application will also reveal the truth from certificates and references). "Will they do the job" is all about motivation. These are questions around what makes them get up in the morning. "Will they do the job here" is about whether they will fit into Indigenous culture, the organisation's culture, and its policies and way of working.
Independent Directors can bring a whole "left field" of experience and skill otherwise lacking. However to do so they need to understand the cultural context of the organisation and see if they can fit into it – how will they assert their expertise? Crucially they also need to quickly read the internal relationships and politics. In order to be effective they need to understand the internal relationships and decision-making processes, otherwise they will either be a bull in a china shop or a shy wallflower on the outer.
Encourage independent Directors in their own due diligence of the organisation and watch how they do it. The more they understand the financial and governance of an organisation the more they can become effective quickly. An applicant who's not interested in the workings of an organisation could be a liability or have another agenda.
Ensure they understand how important it is for Indigenous organisations that they spend time "on the ground". While non-executive Directors of commercial companies can attend once a month meetings in the city and perform their functions from reports and documents, the governance of an Indigenous organisation is actually affected if the Director does not see what's happening on the ground, and how constituents and members react to decisions.
Be aware of potential conflicts of interest – even those that don't exist as yet but due to the nature of their role might arise. For example, let's say an independent Director is appointed because of their business networks, and their role is to assist the organisation in its investment into commercial ventures. In time, to fulfil their role, they may be introducing the organisation to their business networks. Depending on the type and nature of these networks, conflicts of interest may arise because the investments that come from these networks may be those that the independent Director has some interest – financial or otherwise – in.
It really is good that more and more Indigenous organisations are looking to appoint Independent Directors to their Boards. It can only lead to wider networks and building of capacity, better governance, and a general upskilling for all in the organisation. However it has to be handled well, so that the right person is found for the role, so that the appointee is able to work with the other Board members, and so that the most effective, ethical Director is found.
Appreciate the advantages, understand the risks, and take steps to mitigate those risks.
If you want to know more about our experience in helping Indigenous organisations in improving their governance processes or in planning for growth and sustainability, check out our website at www.otsmanagement.com and click on the Contact Us tab to organise an obligation-free interview.