Many successful hotel industry executives view serving on the board of a major public company as a logical step in the progression of their careers. There are numerous benefits to serving on a public company board. Not only can the experience expose hotel executives to different leadership styles, corporate cultures and business models, it can help them to see issues from a board-level point of view. Board assignments also extend individuals’ professional and personal networks, introducing them to senior executives from other industries, some of whom may serve as sounding boards. Board service can also prove to be an excellent transition into a post-retirement career, providing an outlet for experienced executives to continue to use their business experience.
On the surface, it might appear that there should be great demand for experienced executives and, thus, ample opportunities for board service. In reality, however, there are few board director openings in a given year. Complicating the search for new directors is the fact that boards are usually looking for directors who meet very specific criteria, and the dynamics in board composition shift from year to year.
If you’re thinking about joining a corporate board, the following guidelines will give you a head start:
Do your homework
Serving as a director is a time-consuming activity, so you want to be sure the investment is worthwhile. Think carefully about the industry sectors or business issues that are of greatest interest to you, and consider where there could be potential conflicts of interest. Go through the Fortune 1000, Russell 2000, Hang Seng Index 50, TOPIX 100, Expert 400 and/or FTSE 100, and compile a list of the companies that are the best fit. Organize the list into categories, prioritize it and, for your top picks, identify the board members of each. You may be surprised to find that you already know some or have contacts who do.
In addition, it’s important to understand key governance trends and their implications. We publish numerous resources for boards and aspiring directors, including our annual indexes of data and trends in board composition, board practices and director composition for a wide range of industries and geographies. For those who want to maximize their hotel leadership experience and aim to serve on a board within the hospitality industry, here are a few highlights from our annual examination of 18 U.S. hospitality and leisure companies:
- 89% of hospitality company boards have at least one female director, down five percentage points from 2014. Fifty percent have two women, 6% have three and 11% have four.
- The average age of independent directors on hospitality company boards is 61.5, almost two years younger than the S&P 500 average.
- 67% of hospitality company boards separate the chairman and CEO roles, compared with 48% of S&P 500 boards. Three companies have an independent chairman.
- 83% of hospitality company boards have annual director elections.
- Half of hospitality company boards report having a mandatory retirement age for directors, compared with 73% of S&P 500 companies.
- The total average per-director compensation for hospitality company directors is $258,992, 7% less than the S&P 500 average of $277,237.
(You can click here to read the full U.S. Hospitality & Leisure Corporate Governance Snapshot.)
Set your sights appropriately: What companies are appropriate for you based on your experience and the needs of the board? Once you set appropriate expectations, you can recognize that there are other places where you can get useful experience and put your knowledge to work.
This can either be people in the boardroom who will advocate on your behalf or other people that are influential in the director selection process. Start by expressing your interest in serving on a board to colleagues who already serve; they will often refer names of interested candidates to the committees that contact them. Reach out to other people who may be influential in director selection, including executive search firms that focus on director recruitment, lawyers, investment bankers involved in deals, accountants and, especially, private equity firms.
Develop your pitch
Highlight unique experiences and skills that boards will find relevant, such as involvement in governance activities, leadership experience — including the size and type of businesses you have run — and any global track record you might have. Many companies are wrestling with the impact of digital and social media and are looking to bring that knowledge into the boardroom. Others are seeking candidates with on-the-ground experience and relationships in the BRIC (Brazil, Russia, India and China) countries and or other markets. And, of course, if you have current or previous experience serving on a board or interacting with a board of directors, highlight that as well.
Get some board experience
The chances of becoming a board director for a major public company without some prior board experience are very low. For many, serving on the board of a smaller company may be a logical first step. Boards of smaller public or private companies are more willing to recruit knowledgeable hotel executives who are new to board service, and the experience gained through these assignments can improve your odds of being asked to serve on the board of a more prestigious company down the line. It also may be both pragmatic and fulfilling to pursue a directorship with a nonprofit, such as an educational, healthcare or social services organization, as you build your board resume. If you are an excellent director in these settings, adding value and working collaboratively with others, you are more likely to be top-of-mind when one of your co-directors hears of an opening on a public board.
Director education events for existing directors offer the opportunity to become more familiar with the governance issues shaping the boardroom today and to meet well-connected individuals who can offer unique insight into the director selection process or recommend you at some point in the future. However, board training classes are not seen as qualifying you for board service. To take the next step, attend a board meeting of your existing company to gain experience and develop areas of expertise that will make you an attractive candidate.
The bottom line
Board service can be professionally and personally rewarding, and boards need executives with the global perspective and customer orientation that many hotel leaders possess. As the pool of traditional board candidates shrinks, opportunities exist for motivated individuals to position themselves favorably for nomination when boards find themselves in need of a new director. Understanding how to match your skills and experience to those that boards are seeking may increase your chances of gaining a seat at the table.
Originally published in Perspectives at Global Hotel Network.com.