How 'rational' are our choices for new directors?

• Author: Cook, Gary M.
• Position: DIRECTOR SELECTION

Most of us believe we strive to make the best possible choices when we add or replace directors. The question is: how rational are we really?

Our selection processes for new directors are subject to a host of subtle and often unrecognized biases, the result of which can create much less diverse and effective boards than most members realize.

Biases in determining the pool of candidates

One of the most obvious biases directors face in identifying and recruiting candidates is the bias relating to our "known associates," that is, those people who we know well enough to consider as candidates.

Age is probably the most insidious factor. I've known boards where, as the average age has risen so has the average age of director candidates advanced for consideration. Why? Because as board members themselves age, their natural cohort of contacts and colleagues tends to age as well. Perhaps there is nothing inherently wrong with this. But there are numerous situations where this is distinctly unhealthy, among them:

* Where the organization's natural stakeholders (be they customers, indirect customers, or enablers) are of a different age cohort. A good example would be a credit card company with a natural constituency of younger credit card holders: Having at least one or two individuals on the board from that age group can obviously add much to the richness of discussion.

* Where the organization sees itself as a long-term player in its market. It seems obvious, but building talent for the future at the board level is every bit as important as doing it for the underlying business the board serves. However, whether the CEO is the board chair and does the selecting, or the roles are separated, boards typically have difficulty bringing on younger talent.

Another factor that tends to distort a director tor candidate pool is diversity. Like it or not, in the drive inherent in most boards to "be diverse" is the hidden challenge of what diversity actually should mean for that board. It is easy to say that a board "needs more women" or "should have more people of color." But the precedent question that should be asked is, "What kind of diversity can most help us?"

Biases in choosing among director candidates

Then there are the biases affecting selection of directors once a pool has been established. Among these are:

* lngroup bias: Though the motivation for preferential treatment of members of one's own group may seem obvious, there exist certain kinds of...