Dear Board Doc: How to Interview a Board Candidate

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Q: I am the chair of a small fund board, and we will soon begin the recruiting process for a new member. Can you suggest any best practices around interviews, including interview questions that could help us properly assess director candidates?

A: Assessing a fund board candidate can be a challenging task for any board that seeks to maintain its overall effectiveness. Once you have filed through the dozens of resumes and slated a short list of candidates, you may wish to design a plan for how to get to know these candidates and to have them get to know you as well. Some practical considerations for your interview plan are how many interviews you will have with each candidate; how many and which board members you will include during each interview; and whether initial meetings will be in person or virtual. At the later stage of the interview process, you may wish to spend extended time with a candidate to observe their interactions with board members over an entire day (or several hours) and in different environments (over a restaurant meal, for instance), in order to get a better sense of their personality and temperament.

Governance specialists have advised that the interview process should be conversational and relaxed yet still focused and productive, in terms of getting to know the candidate’s background, professional skills, character, ability to build consensus, and willingness to commit to the fiduciary and regulatory responsibilities of the fund director role.

In terms of questioning, governance specialists recommend focusing on certain key areas. You may wish to ask whether the candidate can adjust to a team dynamic instead of being the one to drive decisions. For candidates who are former executives, this trait is critical as boards tend to value collective decision-making and the ability to compromise. You may also wish to ensure that the candidate can commit to the time necessary for board meeting preparation, meetings, and travel. Further, the candidate should be able to appreciate that the fund directors’ role is one of oversight of the funds and not management of the adviser’s business. Ensuring that the candidate can function within the limitations of an oversight role yet still wield influence and authority in the boardroom is important. A candidate’s ability to approach issues with curiosity and intellectual rigor is necessary in the heavily regulated fund industry. You may wish to question the candidate on their adaptability to new concepts and their overall interest in the fund industry. Depending on the board’s priorities, you may wish to learn a candidate’s perspectives on industry and regulatory issues that could directly affect your board, e.g., possible regulation on ESG and board composition. Personal integrity is a valuable trait in a director, as reputational issues can be a negative for the board and the funds it oversees. You may wish to question the candidate on their volunteer activities, hobbies, personal and civic life, as these activities can reflect personal ethics, thoughtfulness, and other characteristics that can engender collegiality and competency on the board. The following are direct lines of questioning you may want to pursue with the candidate:

• What is your view of the funds’ adviser and how it has operated in the industry?
• How do you view yourself as an advocate for shareholder interests and how that role interacts with the adviser’s business and position in the industry?
• How have your previous roles in the boardroom or in other areas prepared you to build consensus with other directors?
• How much experience have you had with the media, in settings subject to open meeting laws, operating in the public eye, or in roles that highlighted the public impact of your work?
• Do you have the time and capacity to fulfill the duties of a fund director?

• How have you contributed to your industry in the past?

Resources: Finding the Right Fit: Assessing First-Time Candidates for Non-Executive Directors, by Julie Daum, Will Dawkins, and Angeles Garcia-Poveda. May 2019, Spencer Stuart.