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As in-house attorneys are increasingly expected to take on more strategic roles, in addition to counseling business executives, there may come a time when you must advise (or remind) the Board of Directors the qualities they need to look for in prospective directors.
What follows is a quick list of some of the attributes that a good addition to the Board of Directors would have.
The last thing you want to do is select someone who won't have any time to devote to the company. All prospective board members will be busy -- but if the person shows no interest, or shows signs of being overwhelmed or not having enough spare time, then consider the next candidate.
2. No Conflict of Interest
Be sure to steer clear of any person that may have a potential conflict of interest that would affect your company. You may need to research other companies the person has worked for, or invested heavily in.
3. Understands the Business
One of the most important factors for selecting a great director is that she must understand the business. Sometimes the expertise can be developed in a different industry, and an outsider's view will reinvigorate the decision making process, but fundamentally, a director must possess a minimum level of business acumen.
4. Understands Risks
A prospective director will not have to point out all potential risks (that's what the GC is for), but the prospective director should be experienced with locating and assessing risks, in order to make important business decisions.
5. Aim for Diversity
If your board only consists of white men, with no representations of other races, ethnicities, or women, consider adding some diversity to your board. Many recent studies have shown that boards with more diverse board members outperform companies with less diverse boards.
While there's no formula for picking out board members, trying to find directors that fit as many of the suggested categories above may help in easing transitions, and boosting profits. And, don't discount attorneys -- they can make excellent board members and add additional value.