Facilitating the search for outside directors.

• Author: Serwat, Leonard H.

It wasn't all that many years ago that openings on corporate boards of directors were filled in a month or less.

The chairman or chief executive of the corporation (usually one and the same) would do one of two things. First, he'd look at his management team and evaluate who had the seniority and the job experience to qualify for the board. But if the limit of inside to outside directors - if one existed - had been reached, the chairman/CEO would do the next best thing. He'd survey his circle of friends, peers, and fellow club members to see who was available.

It was that kind of approach, of course, which contributed to share holder and media charges of cronyism and an intensified scrutiny of boards of directors as we exited the 1980s and pushed into the 1990s.

These days, Spencer Stuart's research indicates, Fortune 500 companies alone experience between 600 to 700 board vacancies per year. An increasing number - one in six - are filled through the services of executive search firms such as ours. But whether those vacancies are filled by a search firm or through the efforts of the CEO and his board's nominating committee, a range of often conflicting pressures is resulting in the search process taking a good six months on average to complete.

That is six months of lost experience and knowledge which the best candidates can bring to the board. More importantly, that delay may also result in outstanding candidates not being considered or even withdrawing from the screening process.

One area of pressure in the search process is the continuing and growing trend toward fewer insiders on corporate boards. The ratio today is one insider to three outsiders versus one insider to two-and-a-half outsiders just five years ago.

Companies also are realizing a heightened need for specific skill and experience among their directors, which was not a primary concern in earlier years. Primary among the skills and experience in demand are:

* exposure to global markets, pressures and competition;

* knowledge of consumer trends; and

* experience in relevant technologies.

The 'Supply Side'

Contrast those factors to the following "supply-side" forces. Most CEOs - the most sought-after market for potential directors - are already serving on all the outside boards they feel they can reasonably manage (averaging two or three plus their own). Even for those who are not fully booked, the time demands on directors today have many executives reluctant to take on the...