From public service to public company: recruiting former government officials and retired military officers as directors.

• Author: Jones, Dale E.
• Position: HEIDRICK & STRUGGLES GOVERNANCE LETTER

IN 2011, A LITTLE MORE than 10 percent of newly appointed directors at major corporations came from the ranks of former government officials and retired military officers. Former U.S. Senator and Indiana Governor Evan Bayh joined the board of Fifth Third Bancorp, whose board is chaired by former FDIC Chairman William Isaac. Retired General William Wallace was elected to the board of Oshkosh Corp., where retired Lieutenant General Leslie Kenne has served since 2010. Former Chicago Mayor Richard M. Daley joined the board of Coca-Cola, where his colleagues include former U.S. Secretary of Labor Alexis Herman, former U.S. Ambassador to the United Nations Donald F. McHenry, and former U.S. Senator Sam Nunn.

Following the worldwide economic crisis, many boards focused on strengthening their financial expertise, seeking new directors from the ranks of CEOs and CFOs. But as the recession fades farther into the past, the trickle of former public servants onto boards could become a trend. In any event, there is a strong case to be made for drawing from this "non-traditional" pool of talent -- and some careful considerations to be taken into account in the process.

The big benefits

Some of the many advantages that former public servants may bring include:

* Relevant industry knowledge: Companies in aerospace and defense, for example, have long recognized the value that former military officers can bring to their boards - knowledge of how the Pentagon works, an understanding of future military needs, and comfort with large-scale, long-term projects.

[ILLUSTRATION OMITTED]

* Policy experience: Government policy can affect the competitive positions of firms and influence their performance through legislation, regulation, subsidies, taxes, labor standards, international trade relations, administrative rules, and in a variety of other ways. Former government officials who have been responsible for formulating or executing government policy can bring invaluable insight into both the process and the substance of policies likely to affect an industry or a company.

* Regulatory expertise: Regulation is of course a subset of policy that is of acute concern to companies in heavily regulated industries like pharmaceuticals, financial services, and utilities. Such companies can benefit from the experience of directors who have been federal or state regulators or who, as Senators or Representatives, have had responsibility for industry oversight, enabling them to...