Establishing and maintaining a skills-based board has become a proven corporate governance practice. It enables a board to comprise itself with the skills, expertise, experience, and other attributes considered important to the board maximising its value to the organisation and to improved organisation outcomes (whatever these are for each organisation, for profit or for purpose or for some other reason).
A common question that is asked when discussing a boards’ skills matrix is ‘what do we put in it?’. Closely followed by, ‘how do we measure and survey our board members?’, and lastly – but often forgotten – ‘how do we leverage our skills matrix for positive outcomes’?
This article answers these questions so that when it comes time to set, or refresh, your board’s skills matrix, it can become a comprehensive and meaningful tool to establish and maintain a board that delivers high value to the organisation, and it can have impacts and influence on other conversations aimed towards having the best (most effective, efficient, and committed) board for the organisation.
SETTING UP YOUR SKILLS MATRIX
What areas of expertise or experience do you put into your matrix?
There are several factors that influence or dictate what a board includes in its skills matrix. Although we use the term ‘skills’ matrix, the reality is that the best ‘skills’ matrices include a broad range of attributes, rather than just ‘skills’ that individuals bring to the board. We are much more than our area(s) of expertise. We come with inherent and developed traits, temperaments, and styles of working as well as professional specialities, networks, and other attributes. Smart boards realise this and reflect this reality through their board skills matrices. So, approach your thinking and conversation with a broad definition of ‘skills’ as you embark on a conversation about what attributes your board wants to see in its skills matrix.
As your board commences the conversation about its bench-strength, consider asking ‘What’s better at a board level? and ‘What may be better served at an executive/senior level?’. Your organisation may be at a stage where investment into an employee will be more valuable than bringing in a board member with a particular expertise.
The Strategic Plan
The organisation’s strategic plan is one of the first logical ports of call for an indication on the expertise, skillset, experience, and professional network considered valuable for your board members to have.
As a board, answer questions like: ‘Where is the organisation going?’, ‘What are the strategic ambitions of the organisation?’, and ‘What bench strength does our board need to support the achievement of its purpose and for the organisation to achieve its strategic goals?’
Given this strategic context, consider the role of the board at this moment in time and over the next 2-6 years (which is generally one to two terms of a board member).
BHP’s public Board Skills Matrix includes strategic focused attributes of Board Members, such as social value, community and stakeholder engagement to reflect the growing importance of ESG in the Boardroom. Source: BHP 2022 Annual Report, p 93.
Soft Skills and interpersonal Attributes
With organisation culture and the interpersonal/political nature of the boardroom, consider including ‘soft skills’ into your matrix. These are attributes such as emotional intelligence, empathy, integrity, and the ability to integrate well into a team. Including culturally relevant attributes desirable from the board members – those attributes that support the culture and behaviours desired in the boardroom and organisation.
Diversity is an established and proven source of value for all teams, including Boards. Consider including diversity attributes on your matrix. This is a simple way to put your diversity ambitions front and centre, and as an active component of your board recruitment or refreshment strategy. Gender is one factor but think about other diversity characteristics that make sense for your board and organisation. Maybe age is important for you to consider on your board because your organisation serves a younger audience. Or perhaps bringing in a culturally and linguistically diverse individual will help your organisation deliver its message to a wider audience, or simply bring another dimension to the boardroom.
Although not part of their public Board Skills Matrix, CBA tracks various attributes of board members beyond skills and expertise. Source: CBA 2022 Annual Report, p 71.
Don’t just use what you know or what has traditionally been on skills matrices in the past. Look out to other boards’ skills matrices and what skillset / expertise is needed in your boardroom in the short to medium term future that you may not have even considered. For example, ESG or sustainability is becoming important for most organisations, maybe it’s time to bring that into your boardroom. Perhaps cybersecurity is ramping up in your industry. Or people and culture are a significant part of your business as you scale and expand into new locations.
If you have constitutional requirements – like certain representatives or members who must be on the board – you may want to include these in your skills matrix, so you maintain oversight of these requirements.
Weigh it up
Taking your skills matrix a step further, your board may find value in weighting certain attributes higher than others. This may help to focus on the critical or mandatory attributes required or desired from board members. If you want to keep it simple, measure everything with the same weight.
Qualify each Attribute
Each board member may have a different definition of what each attribute means. It helps to provide a brief qualifying statement as to what each skill or attribute is referring to and also how to gauge or quantify experience against your skills matrix’s measures. For example, Wesfarmers qualifies their ‘leadership’ attribute as “Experience in a senior management position in a listed company, large or complex organisation or government body.”
Wesfarmer’s public board skills matrix describes the combined skills, experience and expertise presently represented on the Board, along with a brief description of each skill area to ensure a shared definition. Source: Wesfarmers 2022 Annual Report, p 89.
USING YOUR SKILLS MATRIX
Now that your board has populated its skills matrix with the attributes considered important for the board and organisation now and into the medium term, it’s now time to assess.
Who do you assess?
Of course, your board skills matrix is for the Board so you will survey the Board Members. Further to that, it may be of value to include the CEO and senior executives (and potential internal and external CEO candidates) so that you get a true sense of the bench strength of the highest levels of the organisation.
If you are actively recruiting for the board, it is valuable to engage potential board candidates to add their ratings into a public version of the skills matrix so that they can be assessed in real time against the existing board members (and senior executives if they have been included).
How often do you run it?
Most boards will update their skills matrix annually. This is to capture the increase in skillset, expertise proficiency and development, and to include any professional development undertaken individually or as a board since the last survey.
When people leave the team, that individual’s results should be removed from the matrix so that you always have an accurate picture of your team’s current attribute levels. Conversely, when new people join the team, it should be updated to include their ratings.
What technology do you use?
If all you have is a pencil and paper survey, use what you have! Something is better than nothing.
Online survey tools, like SurveyMonkey or a Google Survey, or even a simple spreadsheet - tools that can easily crunch the numbers for you – are potential worthwhile investments to facilitate your board skills matrix survey, analysis, and conversations.
Whichever tool your board uses, the results should be shared with all board members in order to facilitate and support meaningful conversations about what it is telling you about the board and senior management and its appropriateness for the organisation.
Part of the conversation can also focus on any improvements in the overall skills matrix compilation and surveying process for next time.
The board skills matrix is not an end in itself. It is a means in which to gather data to help inform decisions based on the reality you have been presented.
LEVERAGING YOUR SKILLS MATRIX
This is where the rubber can hit the road. A well-designed and completed skills matrix is a valuable tool to use to help your board make decisions on succession planning and recruitment, professional development investment, and to progress diversity goals.
Succession Planning and Recruitment
Naturally, the skills matrix plots the degree of your current board members’ and senior executives’ attributes. Doing so will demonstrate where you have plenty of bench strength. It will also highlight gaps for the Board and executive team where the bench strength is lacking against the desired state. These become priority areas for recruitment or professional development, depending on the attribute in question.
Being able to toggle certain board members’ ratings on and off within the skills matrix can help you to understand where the various attributes levels rise and fall, and what becomes a priority for the next board candidate or senior executive to be recruited, helping to target your recruitment campaign.
For senior leaders in the organisation, the skills matrix may help support decisions relating to CEO succession planning, particularly around developing promising internal candidates, or by helping to identify potential external candidates.
Informing Professional Development
A skills matrix is going to highlighting the areas where investment (time and money) into education/development, either as a whole or for individuals, may be worthwhile. Using the skills matrix for individual professional development investment is more fraught as skills matrices are not all encompassing and are self-rated, so it may not accurately identify an individual’s true or realistic perception of their development needs. Nonetheless, they can help to facilitate a meaningful conversation for the board and executive regarding its professional development activities.
Self-Driven Diversity Improvement Tool
By including soft skills and inherent diversity characteristics (such as gender, age, or race) your board can create its own diversity goals that support the board and that make sense to your organisation. Having these diversity characteristics consistently in front of you and as an equal part of your board recruitment activities, like other hard skills and expertise are, the more likely they are to be achieved.
A well-executed and leveraged skills matrix enables a board to comprise itself with skills, expertise, experience, and other attributes considered important to the board. It will support the board to maximise its value to the organisation and lead to improved organisation outcomes, whatever these are for each organisation, for profit or for purpose or for some other reason.
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