The Nominations Committee: not so easy after all

Recognising – in a discussion with the full Board – the obligations, difficulties and limitations of the Committee’s work so as to avoid an expectations gap. And if a closeted inner group is unavoidable, be clear about how it will report to, and when necessary involve, the rest of the board, so it won’t be seen as taking control.

Take the opportunity to think through how the Committee might be developed to have a greater purpose. The occasional director appointment isn’t enough to allow it to develop a proper rhythm of work, so see if you can find it a meaningful role that gets its members properly engaged. For example, some Nominations Committees are now extending their coverage to include questions such as leadership and talent development, in part to make sure internal succession doesn’t become a problem. And if other parts of the “people strategy” are not getting the right level of oversight, they may fit neatly onto the agenda too.

Make sure that the committee’s work on succession planning – for NEDs and the executives – is supported by good management work. It needs active and effective work by HR and the co sec team working together. Respective responsibilities must be clear, processes understood and followed, communication timely and effective. And timing is particularly of the essence when it comes to consulting investors.

Planning well ahead so the committee meeting schedule has a meaningful rhythm. The “pipeline” and the plans for filling it need to be developed over time and kept on top of. That probably means meetings every three or four months, even if some of them are short.

Planning with an eye on the longer term. What’s needed today is not necessarily what’s needed five years from now – let alone nine. So the committee needs to be tying in its succession plan to the strategy and anticipating what the business will look like – and then challenging each other about what sort of board will help that business succeed.

Skills assessment is systematic and tied into the succession plans. A target “skills and experience” matrix is mapped to an assessment of current board membership – executive and NED – in a structured way which reflects the specifics of the business.

Ensuring that rotation and succession plans don’t lead to too many NEDs being replaced at once. That can lead to an abrupt change in the board dynamics as well as a sudden reduction in the board’s knowledge of the business and thus its ability to offer insight and challenge.

Keeping an eye on the relative timing of CEO and Chairman changes. (The managed variety of change, not the under-a-bus variety.) It’s sometimes hard to pin them down, but even if you can only get a broad range from one of them it will help the other to know what to avoid.

Thinking about the characters not just the experience. A well-grounded succession plan will look at styles of contribution, “leadership” (for committee chairing), analytical vs intuitive, provocative vs measured, thoughtful vs lively… Good boards are a mix of all these things.

Remembering how important humour can be for easing the discussion along. You need a mix of some who make the jokes, some who laugh at others’ jokes, and not too many who frown on frivolity.

Working out what diversity means in the case of this board and this business – and how it can be used to bring insight from a range of different, but equally valid, perspectives. Diversity can be used to great benefit but it’s a big, multi-faceted issue which needs quite careful thought.

Keeping a close eye on the induction of new NEDs. Yes, the practicalities need to be looked after by the company secretary. But the Committee should oversee the structure and the actual delivery, and get and give feedback on how both could be improved. Induction is a very important part of a director becoming effective quickly and the Nominations Committee has a responsibility to make sure it works.

As part of recruitment and induction, taking responsibility as a committee for making sure new directors (both non-executive and executive) know what it means to be on a board. Some will be old hands as NEDs, but others will only have experience of boards from their time as executives. And that means explaining not only the legal responsibilities but also the expectations of the Chairman, committee chairmen and executives. Most importantly, it means explaining about dynamics and board life. Every board is a unique social system and it can take quite a while for a newbie to figure out how it works.