By Melinda Moore, FCIS, Manager, Corporate Governance, Ontario Hospital Association
Finding and recruiting the right people to sit on a board of directors is getting more complicated and more important. To help in defining the role, many boards are adopting a formal competency matrix to describe the knowledge and experience required by board members to meet the increasing expectations and enhanced scrutiny on boards of directors. A competency matrix helps define the collective requirements for the board and facilitates a gap analysis that can be used to develop criteria for the director of the recruiting process.
Various factors can influence the types of competencies that are considered when developing a matrix appropriate to a particular board and organization.
Vision statement: What is the vision of the organization? Where is it going? What is it trying to achieve?
The answers to these questions can help identify the perspectives and experience that board members, collectively, should bring to board deliberations.
Stakeholders: Who are the stakeholders? What is their connection to the organization? How can their experience inform board discussions? Can they be categorized into distinct groups that share views that should be included? Are there design characteristics that can address concerns of specific groups?
The answers to these questions will be very different for a member association whose members share a common goal from those of an organization that provides services to clients. For many groups of stakeholders, consultation in the development of the strategic plan and in the creation of new programs will be the most appropriate approach. For others, their insights may need to be built into decision-making through board membership.
Role of the Board: What is the current role of the board? What does the organization rely on individual board members to do?
In a start-up organization, board members are frequently required to “do the work” rather than oversee it. At this stage, the organization may want the board member with financial expertise to also be the bookkeeper and work directly with the auditor. This requires a different level of commitment and knowledge than a financial expert who is asked to chair the finance committee. In a niche industry, board members may be strategic advisors on upcoming opportunities and in a charity, they may be expected to have access to a broad network of potential donors. All of these various roles will influence aspects of the competency matrix.
Relationship Management: What historical relationships need to be honoured in changing the board’s composition?
Perhaps there is a related entity that has always had a prominent position on the board or a founder who needs specific consideration. It may no longer be appropriate to serve these relationships through board membership, so finding the right stakeholder engagement processes to support the on-going relationships may be an important part of implementing a matrix-based board membership.
Operational Environment: What is the environment in which board decisions are made? Is it important to be able to engage the board quickly to make decisions on short-notice?
Although technology is making this easier and the new federal and proposed Ontario provincial legislation will allow application of that technology to board deliberations, decision-making style can influence the size of the board and, maybe, the geographic location of its members. An organization that needs board decisions frequently and encourages in-person discussions, may need to recruit a small, local board.
Organizing the Matrix: How can the competencies be organized in the matrix?
The different aspects of a competency matrix can be identified using various lenses; for example, expertise, experience, and personal characteristics.
Expertise – What are the specific areas of knowledge that the board needs either in one member (e.g., certified financial professional) or in every member (e.g., understanding of governance principles and fiduciary responsibilities)?
Experience – Are there specific constituencies among the stakeholders whose perspectives should be included in board decision-making to enable the board to lead the organization toward achieving its vision? For example, a community agency might recruit people with experience as clients or caregivers of clients to ensure consideration of that perspective in deliberations.
Personal Characteristics – What behaviours do board members need to exhibit to lead the culture of the organization? A statement of behavioural norms will help those considering serving on the board to understand the expectations.
Verifying Competencies: How will the recruiting process verify the competencies people bring to the table?
It may also be important to be transparent about evaluation methods used to validate the competencies. Expertise would be demonstrated on a resume or CV; experience through the resume and interviews; and personal characteristics through discussions with the references and during the interview process.
A competency matrix can be an important tool to ensure that expertise and experience inform decision-making that will advance the organization’s vision and mission. Many samples and templates exist that can be adapted to the specific requirements of each organization. The Guide to Good Governance includes samples (http://www.thegce.ca/RESOURCES/Goodgovernance/Pages/default.aspx) and the OHA’s Board Competency matrix, which includes definitions for each competency and evaluative tools, is available at (http://www.oha.com/AboutUs/BoardofDirectors/Pages/OHABoardofDirectors.aspx)