Good News: Recruitment of Corporate Council becomes strategic

Copyright © HT Digital Streams Limit all rights reserved. Opinion Ralph Ward, M. Muneer 4 min Read 17 Apr 2025, 12:30 IST Today’s boards need leaders with the ability to see around corners. (Pixabay) Summary management missions, stricter rules for interest of interest, court decisions, rising director liability and increasing investor activism have shifted the focus to fine targeted recruiting of the council. Interviews for these roles have changed a sea. Council appointments have long been determined by promoters and top managers, with allies selected by hand to echo it rather than challenge them. This is clear in the public sector companies in India. Family businesses were also known for this. At startups, boards usually consist of a small group of founders and funders. This structure, although not without its challenges, is understandable. In contrast, large caps get much more attention for the composition of their boards. Traditionally, this included bankers, company promoters, top officers, retired bureaucrats and high profile figures. Many are more selected for their mortgages in high places than their strategic skills. Also read: Corporate boards should not show CEOs the door prematurely, but management errors, stricter rules of the interest of interest, court decisions, the increasing director liability and increasing investor activism have shifted the corporate focus to fine targeted recruitment of the board. Corporate boards in developed economies identify the specific skills and expertise they need and seek individuals who have these characteristics. Broadly, contemporary boards need leaders with the ability to see around corners. Friends of promoters or friends of current management members must make way for independent management members, whose role represents the interests of minority shareholders. The skills in demand for management members include digital technological skill. Despite setbacks to diversity, fairness and inclusion (dei) in the US, it remains a leading principle, just as board discussions inevitably become with the environmental, social and management (ESG) issues, regardless of the tendencies in America. Thus, ESG expertise is also valued. Also read: Company councils must act as torchbearers to build trust among stakeholders as boards become more strategic in their recruitment efforts, the maintenance process also develops. Here are some ways in which this process changes: the end of the single council interview: The traditional single session is replaced by a series of distributed one-on-one interviews fed online. This approach enables different management members to judge different aspects of the suitability of a candidate. Tighter selection of qualifications: The days of simply blowing through a candidate based on the CEO’s preference is over. Fat become more strict, focusing on skills, experience and any possible disqualters. Diversity remains a concern worldwide, powered by regulatory mandates as well as investor pressure. The ability to attend physical council meetings: Although virtual council meetings have become more frequent since 2020, it is clear that a growing effort to return to physical boardrooms. The increasing demands on management members’ time mean that their ability to meet these obligations can be a key factor in the selection process. NEW MAINTENANCE QUESTIONS: Council candidates can be expected to be asked about their involvement in DeI initiatives and the advocacy of change within companies on ESG. Candidates who reject Dei and ESG as outside their lead may be found for council roles. Also read: CK Prahalad, the oracle whose wisdom is still echoing in Indian boardrooms beyond professional skills, the contemporary boards must also investigate the backgrounds of their prospective members more thoroughly than ever before. The problems with the button are similar to those in the case of executive leases. Brushes with the law score. Was this nominee involved in personal or business bankruptcy? What is the history of the candidate, as well as plaintiff and defendant? How about personal violations of law, such as domestic violence, sexual offenses, drunken driving or drug abuse? A large part of the necessary caution is to verify career and academic demands. Inflated credentials are surprisingly common, with short academic courses dressed as grades and exaggerated work titles. If there are contradictions, boards must assess their seriousness and implications. But background controls are now going deeper and examine the digital footprint of a candidate. Posts on social media, questionable affiliates or controversies in the past can return to haunt the candidate. Companies with reputations for ethical standards cannot afford management members with a compromised integrity. It also applies to public sector organizations that deploy public funds. Legal companies and intelligence operatives are conducting exhaustive investigations. Private investigators are sometimes the task of accessing records. However, internal politics can still play a role. Candidates supported by private equity often assume that their firm’s own selection is sufficient, but this assumption bears thin because it is a good practice for management committees to ensure independent verification. Also read: Balancing the Council Hall: How size, experience and tenure PSU management forms as the expectations of the board rise, executive search firms specializing in management, diversity and cyber security, key players can become in recruitment. In the end, the boardroom is no longer a sanctuary of unmarked power. The era of accidental appointments is over in most countries around the world, and this trend will also have to strengthen in India. Appropriate council composition is a matter of corporate survival these days. A single error in choosing a director can turn a company’s reputation into a liability. As a senior board member recently noted, a boardroom is filled with Ja-men and it is mostly men’s-just a corporate echo room. Real management begins when independent thoughts are obedient. “The authors are a global council adviser, coach and publisher respectively; and Fortune-500 adviser, start investor and co-founder of the Medici Institute for Innovation. Topics #largecaps #esg #shareHolding Mint Specials