It was a privilege to speak at the recent nationalconference of the Society of Corporate Secretaries and GovernanceProfessionals, a non-profit organization of corporate secretariesand business executives involved in governance, ethics andcompliance at public, private and not-for-profit organizations.

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The presentation “Pursuing and Recruiting Directors—How Best toDo So?” gave attendees insights into this critical subject. BeverlyL. O'Toole, general counsel of corporate governance at GoldmanSachs Group, and I prepared a follow-up video for the society'swebsite. I would like to share some of its highlights with you andyou can also view it at www.stuartlevine.com.

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Fundamentally, a board's responsibility is to validate strategyand be responsible for CEO ­succession and performance. The boardassures that compensation plans reflect accountability toshareholders for the overall performance of the corporation.

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Board recruitment is directly tied to these responsibilities.The board's oversight of the creation and implementation of thestrategic plan requires skill sets that a director must possess tomeet both the future needs of the organization, as well as itscurrent requirements.

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Establishment of criteria for board recruitment is a bestpractice. Criteria provide a yardstick against which candidates canbe measured. Diversity of background, thought and experience addsto the richness of the board and should be part of the recruitmentcalculus. The governance and nominating committee is ­primarilyinvolved in setting the criteria, but the entire board must have avoice. A criteria-based approach avoids the focus on personalities,allowing the organization to concentrate on the characteristicsrequired.

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Board recruitment is a continuous process. For privatecompanies, search firms can track the pipeline of directorcandidates available in the coming year. These firms are constantlyin the market and are well positioned to access a network ofcandidates with various skills and diversity characteristics.

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One characteristic that is critical to all board members isintellectual curiosity. This quality is as essential for boardmembers as it is for management as it denotes the importance ofcontinuous learning. Inquisitiveness gives a director a broad anddeep view of the environment in which the organization operates. Itis key to innovative thinking and overseeing the organization.Continuous learning must be part of an organization's culture andit starts with the culture of the board. Smart CEOs are at theleading edge of change. The board must match them in thatquest.

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As a best practice, the Board should assess its own performanceannually and each member should complete a self-assessment. Thisprocess must be handled with discretion and confidentiality whichbuilds trust, standards of behavior and ensures a strong culturefor the board.

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Boards are moving toward a more rigorous assessment processesthat ensure directors are performing at an appropriate level.Occasionally the removal of a director is in the organization'sbest interest. It is much easier, however, not to bring on adirector in the first place rather than have to dismiss one. Makesure that the CEO is part of the initial board candidate vettingprocess.

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Some organizations make peer evaluation part of the annualassessment. Other organizations perform an informal peer assessmentwith a lead director, perhaps the chair of the board or of thegovernance committee, canvassing the board members to ascertainthat each director is properly engaged. The lead director acts if aproblem exists. Often a conversation remedies the situation, but inother cases, the director may not be re-nominated.

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A one-size-fits-all approach to term limits is not practical.Longer serving directors can have important perspectives,understanding an organization's history and applying that uniqueknowledge to current challenges. This depth can be lost under termlimits. Additionally, a member may just be hitting stride when theterm limit comes into play. Credit union members ultimately havethe right to elect different directors if needed, regardless ofwhether term limits exist.

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Essential to the success of the organization, is the board'sattention to identifying, pursuing and recruiting quality directorsthat are intellectually curious and have the needed skillsaccording to the criteria that the board establishes. Responsiblegovernance depends on it.

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Stuart R. Levine is chairman/CEO of Stuart Levine &Associates. Contact (516) 465-0800or stuartlevine.com.

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