Are You Ready To Serve on a Captive Board?
February 19, 2020
Recently, my coeditor at Captive.com, Rachel Moir, passed along a January 31, 2020, article she read in the Harvard Business Review (HBR): "Are You Ready To Serve on a Board?" by Anthony Hesketh, Jo Sellwood-Taylor, and Sharon Mullen. Rachel suggested I might want to adapt this specifically for a captive board of directors. It seemed like a natural extension of the writing I do on corporate governance, so I agreed. My target audience in tackling this paper is the younger generation of captive professionals, but certainly the recommendations are applicable to any of our readers.
There are several trends occurring that will provide opportunities for positions on a captive board of directors. First, you have the natural aging out of the workforce of the baby boom generation. Already, nearly 47 percent of my generation has retired, and every day approximately 10,000 of us join that cohort. Many corporate governance policies contain mandatory retirement ages for directors. So baby boomers are required to give up these positions as they grow older.
Second, there is a growing recognition of the need to promote greater diversity within boards. California has gone so far as to mandate this through legislation to add additional female directors. A precursor to the HBR article that is the genesis of this story is titled "When and Why Diversity Improves Your Board's Performance," was written by Stephanie J. Creary, Mary-Hunter (Mae) McDonnell, Sakshi Ghai, and Jared Scruggs, and appeared on the HBR website March 27, 2019. As a result, the opportunity for women and other minorities to seek board seats is increasing.
However, in order to be seriously considered for a board of directors, for any type of entity, you need to be prepared. Cramming right before an interview is not going to cut it. Besides the recommendations in the HBR article, here are some ideas for increasing your chances of being selected when that captive board of directors opening presents itself.
Why are you seeking to serve on a captive board of directors? Are you looking to do so because of the intellectual challenge it presents or because it will look good on your résumé? If the latter is your primary motivator, you might want to rethink your decision. Serving on any board entails a large degree of fiduciary responsibility.
By way of example, I chaired a nonprofit board of directors a number of years ago. It seemed to me there were a number of individuals serving on the board who were there solely because it "looked good" to family, friends, employers, etc. So I invited an assistant attorney general of our state to present to the board concerning the fiduciary obligations and responsibilities of a board member, including the penalties the state could assess if they failed in these duties. Shortly after the meeting, three of our board members decided to resign. For a captive board of directors, the state of domicile's insurance department has enormous power to make your life unpleasant if you fail in your fiduciary role.
So, assuming you want to serve because of the intellectual challenge, the next thing you need to consider is if you are prepared to work. While being a board member is thought of as a part-time job, the time necessary to be a "good" board member can be exponentially greater. First, you will need to read all the material management prepares for the board meeting beforehand. I can tell you firsthand, board members and management have a really good idea of which members come into a meeting prepared and which members glanced through the material at breakfast.
Reading the material early allows you to think through what is being presented and what the strategic implications are. Your job, as a captive board member, is to assist the management team in making sure they have considered all the critical parts of the bigger picture. You can't do this if you don't have time to think. And trying to do it in a board meeting because you just read the materials means you aren't focused fully on the discussions being held.
Be Well Read
Some of you may have read an article I wrote at the end of last year, "A Primer on Leader's Intent for Captive Insurers." I closed with this quote based on one from General James Mattis's book Call Sign Chaos: Learning To Lead (New York: Random House, 2019): "If you are not reading hundreds of books and articles, learning from others who went before you, you are functionally illiterate—you can't coach and you can't lead." This is especially true if you want to serve on a captive board of directors. A board member is required to look at the strategy being presented by management and view it in the context of key trends and external realities, according to the HBR piece. How can you hope to fulfill this major component of your duties if you don't know what those trends and realities are?
And reading is not skimming though the news highlights on your iPhone. To be able to synthesize what potential outcomes are, you need the details. That entails spending time reading deeply and broadly, which, as I pointed out above, requires time outside the board meeting.
While none of these attributes will unto themselves guarantee you of landing a captive board position, they will make you a more viable and attractive candidate.
February 19, 2020