By Joann S. Lublin
As they groom their star executives, more U.S. businesses are
working hard to find them outside board seats.
Chiefs of companies such as International Flavors &
Fragrances Inc., Cognizant Technology Solutions Corp., Sempra
Energy and Exelon Corp. say they have been actively trying to
obtain directorships for several top officers. With insiders now
landing a record number of CEO spots, corporate directorships give
senior executives a strong feel for how other businesses operate.
As board members, they will be "exposed to a different set of
issues," predicts Andreas Fibig, IFF's chief executive.
Consider General Mills Inc. Jeffrey Harmening and Christopher
O'Leary, senior leaders of the major food maker, are vying to
someday succeed Ken Powell, its 61-year-old chief executive,
according to people familiar with the company. That is partly why
directors and others recently began helping Mr. Harmening pursue
his first public-company directorship.
General Mills wants both contenders in its succession race to
serve on a corporate board for at least a year before the board
picks a new CEO, one such person says. Mr. O'Leary has done so
since 2006, and currently sits on the boards of Telephone and Data
Systems Inc. and Newell Rubbermaid Inc.
General Mills often urges leaders to obtain board experience, a
company spokeswoman says. She declined to say whether Messrs.
Harmening and O'Leary are the leading candidates for the CEO
role.
At General Mills and elsewhere, external directorships have
become a key ingredient of executive-development efforts.
"About 80% of big businesses now use their professional contacts
so key players can land board spots, because the experience
broadens their perspective and ability to deal with a board," says
Paul Winum, practice leader for board and CEO services at RHR
International, a leadership-development firm. He estimates that
just 20% of companies made these efforts a decade ago.
Some executive-recruitment firms now offer "reverse board
search" services, getting paid by companies to match executives
with suitable boardroom opportunities. (Recruiters usually get
retained by a board to fill director vacancies.)
Francisco D'Souza, CEO of Cognizant since 2007, says he decided
to assist members of his executive team in seeking directorships
outside the information-technology provider because he learned a
lot by joining the board of General Electric Co. in 2013. "A board
seat gives you a great vantage point on a company," he adds.
Karen McLoughlin, Cognizant's chief financial officer, was wooed
by a recruiter whom Mr. D'Souza approached informally on her
behalf. Last September, she went on the board of Best Buy Co., a
retailer of consumer electronics.
Mark Levatich became a director of Emerson Electric Co. four
years ago, after his employer Harley-Davidson Inc. tapped James
Drury Partners, a Chicago search firm, to advise him about securing
his first public-company board seat. He then was a unit president
for the motorcycle manufacturer.
Inside Emerson's boardroom, Mr. Levatich had to "put on the hat
of an external investor" while focusing on larger issues such as
strategy and finance, he recalls. He says this altered viewpoint
made him better prepared to deal with the investment community once
Harley-Davidson named him CEO in May 2015.
Finding the right board seat for a leader often takes many
months and delicate diplomacy, however. Some companies first make
sure their own executives are board-ready internally, and restrict
outside directorships to the CEO's direct reports.
Mr. Harmening, General Mills's chief operating officer of U.S.
retail, has sought a seat since last summer, another informed
individual says. Amid increased demand for female and minority
board members, the fact that he is a white man represents "a stress
point," this person continues. General Mills declined to comment on
this issue.
Last year, recruiter Betsy Berkhemer-Credaire launched a reverse
board search service for female executives and already has four
corporate clients. But the president of Berkheimer Clayton Retained
Executive Search expects to spend 18 months completing her first
placement.
A reverse board search "is an intense and time-consuming
assignment," Ms. Berkhemer-Credaire says. Among other things, she
introduces executive women to board power brokers and prepares the
candidates for board interviews.
Busy senior executives must learn to juggle the time demands of
an outside board along with their own job.
Cognizant's Ms. McLoughlin rejected a chance to become a
director of a foreign company whose board meets in Europe eight
times a year. "There was no way that my schedule would permit
that," she says.
Walt Disney Co. CEO Robert Iger refuses to let his senior
officers accept corporate directorships. Doing so "would detract
from their ability to focus on their business," says a person close
to the company, which has operating divisions that include movies,
television, consumer products and parks.
Similarly, Sempra directors insisted that Debra L. Reed resign
one of her two external directorships in 2011, when they promoted
her to CEO. The concern owns energy utilities, pipelines,
facilities and terminals.
Ms. Reed chose to leave the board of Avery Dennison Corp., where
she had served since 2009. She remained a director of Halliburton
Co.
After four years as CEO, the Sempra leader won her directors'
approval
to take a board seat at Caterpillar Inc. Ms. Reed says she's now helping her top potential successors to land their first seats. Sitting on the board of another company "is better than an M.B.A.," Ms. Reed observes.
Write to Joann S. Lublin at joann.lublin@wsj.com
(END) Dow Jones Newswires
March 29, 2016 05:44 ET (09:44 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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