Nasdaq launches online board recruiting tool
In May, the Nasdaq Stock Market launched Board Recruiting (www.boardrecruiting.com), a new service aimed at public and private companies. Billed as the first ‘online service of its kind,’ Board Recruiting is essentially a search tool for identifying board members, using a profile-matching system to connect potential board candidates and companies seeking directors.
Given the heightened scrutiny boards have received of late, it might seem an ill-timed product launch. But according to Bruce Aust, EVP of Nasdaq’s corporate client group, it is just the sort of service the market is looking for.
‘We came up with this product after listening to our customers. Out in the field, we hear all the time that a CEO might be willing to serve on a board, or companies are planning an IPO and looking for board members, or listed companies are looking for a board member with certain experience. We looked around and there really wasn’t anyone in the space on an online basis.’
One of the unique functions of the site is that candidates and boards will only be matched on ‘mutual interest.’ The matching is based on profiles provided by the companies and candidates that provide characteristics and descriptions and searchable criteria, but not identity.
‘When a company finds the profiles they’re interested in based on a criteria search, for example, they can then communicate with the person. The candidates then have the ability to come back and say if they’re interested or not. It works in the reverse as well for directors looking for companies seeking directors. It’s a unique approach to board recruiting,’ explains Aust. ‘You can search on different criteria: the type of committee someone has served on, financial experience, etc. All those things are standard search criteria.’
The bricks-and-mortar question
For traditional search firms, it would appear that Nasdaq’s foray encroaches into their territory, but Richard McCallister, managing director at Chicago-based search firm Boyden, sees tremendous value in the service. Like several others in his field, he does, however, add a qualifier.
‘My first thought is that [Board Recruiting] has unbelievable value in what I call the Nasdaq low-end market: small caps and mid caps. The hardest people for a search person to find are people to serve on the boards of emerging companies that have limited brand identification. So this product has incredible value for those people. But the classical way you find directors for large-cap companies is not going to go away or benefit materially from this site.’
Stephen Mader, senior client partner and managing director of the board services practice at Korn/Ferry International, offers a similar assessment. He points out that like many of the online solutions for recruiting that have come out in the last few years, there are some excellent examples, but such tools are not a panacea either.
‘Even though there has been an eight or nine- year effort in electronic recruiting, you won’t find very many matches ever being made with those kinds of tools for people who make over a quarter million a year. There are other things that become important in the consideration and approach and the navigation of people at that level. I think the same will be true here.’
The smaller the better
As Mader explains, boards of larger companies are generally looking for a very specific role or competency capability, and they rely on firms like Korn/Ferry to screen such candidates. But like McCallister, Mader believes there is great value for the smaller companies, especially those that call Nasdaq home.
‘Nasdaq lists many small-cap stocks, and I think in that area directors are not so visible. It’s really about visibility. In the Fortune 1000, people that are qualified to sit on such boards rarely write to us or call to suggest that they might be interested in sitting on a Fortune 1000 board because those that are qualified, by and large, are very visible. But people who know that their fit is in a smaller-cap area, they often do write or call because they know their personal visibility is not very high and they’d be harder to find for the perfect board seat on a smaller-cap stock.’
Aust disagrees that the appeal of the new service will be limited to smaller companies. In the first phase of the Board Recruiting roll-out, candidates posted their profiles. And during phase two, which kicked off in June, companies will begin searching the site for candidates. ‘I would say any size is a great candidate for the product. We’ve already had a larger-cap company express interest. In fact, there’s no reason an executive search firm could not use this site themselves.’
Satisfying the market
In addition to the entire spectrum of public companies and executive search firms, Aust notes that private companies as well as venture capital and private equity firms are natural candidates. ‘These are companies looking for board members for portfolio companies, so we see it as a great opportunity for those types of portfolio managers.’
Suzanne Hopgood, a director as well as president and CEO of The Hopgood Group, a workout, turnaround and crisis management firm in Hartford, CT, believes that Nasdaq is on to something, especially for smaller companies and the directors who might serve on their boards.
‘I think this hits right into the sweet spot,’ she says. ‘The smaller and mid-sized companies are having the harder time finding members and the search firms go to the same people. The small companies aren’t attracting a Colin Powell, but that’s who the search firms are talking to. These are companies looking for a certain skill set, and they aren’t that interested in celebrity status,’ Hopgood adds.
The ability for candidates and companies to determine ‘mutual interest’ is also a useful option, especially insofar as gauging candidate availability. ‘What companies want to know is not just are you interested?’ says Hopgood. ‘It’s do you have the time? … That’s the number one question from smaller companies.’
That said, would Hopgood herself be willing to use the site to post a candidate profile? ‘I could see using it myself, depending on my circumstances at the time of course.’
It’s too early to issue a verdict, but thus far, Aust says the reaction is great: ‘Hundreds of people have logged on and created profiles, and we’re very pleased with the response. The number of profiles is actually exceeding our expectations. We will continue to look at ways to add value to our C-suite audience and board members. Stay tuned for what we might do in the future.’
