A much deeper pool of potential recruits: ignore the alarms about scarcity of talent. The number of qualified board candidates is actually a lot larger than commonly claimed.

• Author: Nordberg, Donald
• Position: Director recruiting

THE FOLLOWING COMMENTS have been drawn from thousands similarly voiced since the governance crisis rocked corporate America in 2002:

* "There is a crisis looming in boardrooms from coast to coast, one that invokes the simple economic principle of supply and demand."

* "Increased responsibilities and a shortage of qualified candidates will likely result in substantial increases in compensation for outside directors."

* "Directors for U.S. corporations have been facing an increasing number of demands. At the same time, the pool of available candidates to fill such positions has been shrinking."

* "Just when boards need them most, independent, qualified directors are becoming scarce."

Fears about the size of the pool of would-be directors have been based largely on conjecture or interviews with board chairmen, directors, and search firm representatives. Is the situation really so alarming?

Granted, since the Sarbanes-Oxley Act and adoption of new listing rules at the exchanges, board candidates face a higher threshold of skills. They not only must be independently minded but also must now meet regulatory criteria for independence. They must work longer hours. In the current climate, any board facing the task of recruiting new directors must be concerned about three questions:

-- Is the pool of talent big enough?

-- Will the new rules frighten would-be directors away?

-- Will we be able to find and recruit the necessary expertise?

Of course, the recruiting task is difficult. With the changes in governance practices, the process of identifying directors requires a more rigorous analysis than the "Friends of Bill" approach of the past. But the pool of qualified directors is actually a lot larger than the scare stories suggest.

Available capacity

Data from BoardEx, an international online analysis system specializing in board and director research, point to a large number of individuals already serving as corporate directors who could potentially take on more board positions. BoardEx profiles 14,000 individuals serving on the boards of more than 4,000 listed companies in the U.S. A large majority of the individuals--8,655, or 61.6% of the total--serve on only one board (see exhibit 1). These are individuals, in the main, whose own companies regard them as qualified to be directors, but who are not currently sharing their knowledge and expertise in any other board position.

Just because someone is a director, though, doesn't automatically mean he...