How to Form a Board of Directors that Advances Your Portfolio Company

3 Min Read

How do you recruit the right board candidates?  

Finding the perfect fit for your board can be a daunting challenge. It is critical to seek candidates with relevant experience to help your PE firm succeed. New members should have a foundation of well-rounded strengths in the following realms, according to Harvard Business Review: 

• Financial: Adept at talking in numbers and interpreting basic accounting information. 
• Strategic: Considers how changes can affect operations and long-term goals. 
• Relational: Seeks opportunities for discussion and decision-making with others. 
• Role: Understands where and how they can add the most value. 
• Cultural: Ability to collaborate with teams of diverse backgrounds. 

Your firm should recognize the value in diversity—the combination of unique perspectives from executive and non-executive backgrounds that leads to comprehensive decision-making. Well-formed boards offer fresh perspectives and bold strategies that empower businesses to excel.

When placing candidates, contemplate how members will collaborate with one another based on personality, leadership and teamwork styles to achieve the most efficient board.

What makes a successful board of directors? 

A prosperous board makes decisions efficiently and effectively to grow the business.

Boards thrive when members feel a sense of partnership and trust with one another. They view the success of each other as the success of the collective unit. It is key for firms to recruit candidates with proven appreciation for group decision-making.

The willingness of members to compromise and eventually unify is essential to the board’s continued functioning. Achieving this requires members to take individual responsibility for their actions.

Additionally, the characteristics of an effective board of directors must include diversity and inclusion. In collaboration with portfolio company leadership, PE firms should recruit, place and maintain the presence of members from various backgrounds to offer insight. This requires initiative at beginning and ongoing stages of the board member placement process.

Keeping a successful board of directors often comes back to the recruitment process. If your firm spends time, effort and energy to find qualified candidates, your board will reap long-term growth benefits. The process is worth the initial investment for rigorous vetting and research.

What board member interview questions should you ask? 

Asking the right questions is an essential part of board recruitment. Without meaningful inquiries, firms will miss out on critical elements of a candidate’s background or philosophies. 

Initial questions should cover the basics. This includes asking about professional background, educational experience and future career goals. 

Dive deeper with additional questions to ask potential board members, including: 

• How do you work with others? 
• What is your leadership style? 
• What culture do you thrive in? 
• How long do you anticipate serving in your board role? 
• Why are you interested in serving as a board member? 

Use proven tips on how to set up a board of directors 

The board placement process is time-consuming, complex and crucial for the future of your PE firm. It is worth partnering with a consulting firm to ensure success and expedite placement. 

Consulting firms like Apex Leaders can help PE firms find candidates who meet their expectations for growth goals, exit strategy and past experience. 

Plus, our seasoned team is trained on how to gauge worthwhile responses to pivotal questions. We work to understand how candidates handle adversity, influence others and assume leadership. We provide extensive interview notes and resumes for PE firms to review. 

After review, our team makes sure PE firms achieve successful placements. We remain ready to keep recruiting, researching and vetting for new candidates if needs change. 

How can I make my board of directors more diverse? 

Diversity is one of the most important characteristics of an effective board of directors. Finding candidates strictly from executive backgrounds can be a monolithic pool, according to another article from Harvard Business Review. 

Candidates with varied experience can bring innovative solutions to the table. Adapting business practices to the COVID-19 pandemic shows the need for diverse perspectives to help navigate challenging times. 

Firms should not seek to bolster diversity by engaging in identity-focused tokenism of candidates. Board will fall short of achieving equity without a true understanding of its value for the company’s future. 

Tap into professional circles that extend beyond your usual group. Finding new candidates takes drive and eagerness for change. Don’t be afraid to make new connections — they will often be vital to finding your next board placement. 

Avoid letting your own views, experience or feelings steer your recruitment decisions. Understand that your own bias can affect which candidates you consider for placement. If you actively work against your instincts, you may uncover candidates who bring incredible value.