How to Use a Board Skills Matrix
The needs of organizations and their board constantly change. A board skills matrix enables boards of directors to continually adapt and evolve.
Nothing in recent history has tested the dexterity of boards and the organizations they represent like the turmoil of the past 18+ months. In addition to the public health trials of the COVID-19 pandemic, many organizations have faced intense financial challenges, shifting stakeholder expectations, and enhanced pressures to be proactive on diversity and other environmental, social, and governance (ESG) issues. This includes a renewed focus on the importance of board composition.
As a result, board leaders across all industries are reassessing the composition of their boards to identify what changes may be needed to best position their organizations to confront these and further challenges going forward. Yet, determining how to change to address an unknown future can be difficult to define, especially when it comes to defining directors’ qualities and contributions.
Forward-looking organizations use a board skills matrix as a practical means for tracking the skills, characteristics, and capabilities of individual directors and the board overall. It helps to simplify board assessments and identify strengths and weaknesses across the board, including gaps that should be filled in searching for new board members.
The Building Blocks of a Board Skills Matrix
Most directors agree there is significant room for improvement when it comes to the composition of their boards. A 2021 KPMG survey found that only about a quarter of directors said they were not concerned that a lack of diverse views in their boardroom hampers a fulsome discussion of the company’s future. Fifteen percent were extremely concerned and 59% were either concerned or somewhat concerned. About a third of survey respondents said they were not satisfied or only somewhat satisfied that their boards have a range of experiences and skill sets that add value in the current global business environment.
So what is the ideal board composition? Needs vary, but, in general, a board with an ideal composition is one that proactively seeks representation from individuals with a broad mix of leadership skills, backgrounds, experiences, and perspectives. Organizations with diverse board benefit from having a “deep bench” of directors with diverse worldviews who can engage in more robust discussions on strategic objectives.
An effective board skills matrix essentially provides a map of directors’ skills and attributes to help organizations identify what they have and what is missing as they develop their own matrix board. Most matrices are in an Excel-like format with a series of columns or rows listing specific characteristics. Some fields can be filled in with answers (i.e., age or number of years on the board), but most are check-marked or not depending on whether they apply to the individual board member indicated on the corresponding row or column.
Examples of fields commonly included on a board skills matrix are a director’s:
- Demographic information (including age, gender, race, ethnicity, etc.)
- Years of board service
- Professional rank
- Areas of expertise
- Governance competencies
- Expected retirement date (i.e., when his/her term expires)
Customizing a Board Skills Matrix to Suit Your Organization's Specific Needs
While board skill matrices generally follow a similar format, the content of the fields will vary. After all, there is no one-size-fits-all when it comes to board structure and composition strategy. A board skills matrix will be different for different types of organizations across various industries because the needs of those organizations are inherently different.
For example, a matrix for the board of a financial services company might include more fields focused on directors’ expertise and knowledge relative to specific areas of finance. The board of a non-profit serving the needs of refugees, however, might focus more on international experience, community service, and interpersonal skills.
Board leaders should work hand-in-hand with executive leaders to identify the board member skills and characteristics that are most vital to serving their organization’s strategic goals. This should include both internal needs assessments, as well as analyzing what competencies peer organizations or competitors may be prioritizing for their boards.
Steps for Maximizing Use of Your Matrix
At OnBoard, we recommend 11 key steps to optimize the board skills matrix and help leaders implement board composition best practices that fit their organizations’ needs now and into the future.
- Review the current skills matrix. Assess the format and fields included on the board’s existing skills matrix. If the board doesn’t have a matrix, begin building one customized to the needs of your organization. In either case, answer the question: Does it include the needed expertise to reach the company’s strategic goals?
- Update the matrix. Based on your review, revise the matrix to include needed skills and attributes identified as important to serving your organization’s short- and long-term goals.
- Request self-assessments. Ask each director to evaluate his/her own talents using the updated matrix.
- Conduct peer assessments. Ask directors to evaluate the talents of fellow board members, and the board as a whole.
- Review the results. Combine the findings from the directors’ self-assessments and peer reviews and ask: What’s missing?
- Seek staff input. Ask organizational managers and administrators for their additional insights.
- Analyze the gaps. Assess the overall findings to identify specific opportunities for improvement. These might include additional training to build the capabilities of current board members, and skills and characteristics to prioritize in identifying potential new board member candidates.
- Facilitate a full board discussion. Present your findings to the board, allowing ample time for board members and staff to ask questions, discuss the implications, and reach consensus on next steps.
- Plan for upcoming board turnover. As part of the matrix, factor in pending retirements and skills to look for in potential nominees.
- Prioritize diversity. Factor in diversity in a variety of forms—such as age, tenure, gender, ethnicity, and geographic and economic status—to assure your board benefits from a broad range of perspectives and adequately represents the communities it serves.
- Repeat. Review and update the matrix and conduct director/board assessments at least annually to ensure an optimal board structure and composition.
What Changed for Boards in 2021?
Tools to Build a Better Skills Matrix
Maintaining a current board skills matrix can help organizations better navigate constantly shifting market, social, and environmental dynamics. A board skills matrix provides a structure to guide discussions on how to mold your board’s composition to fit the organization’s needs. It streamlines the needs assessment process and serves as an essential tool as organizations build succession plans and recruit new board members.
Strategic-minded organizations should consider investing in a robust board management solution that includes board evaluation software with functionalities to help manage your board skills matrix. OnBoard’s Roles and Terms Management tools enable board leaders to centralize tracking of directors’ experience, background, roles, and terms in a single, easily accessible resource. OnBoard also offers a customizable board skills matrix template available for free download on its website.
These resources and the tips featured in this blog provide a solid starting point to help your board build and manage an effective board skills matrix. The goal is to help shape board development and ensure your organization achieves the right mix of skills, backgrounds, experiences, and perspectives to facilitate reaching its strategic objectives.
Frequently Asked Questions (FAQ)
What Skills are Needed to Be on a Board?
The most effective board members offer a broad range of skills, including leadership skills, strategic thinking, communication, team work, financial literacy, and deep vertical expertise.
How Does a Skills Matrix Work?
A skills matrix contains vital information relative to board member skills and expertise. The skills matrix can be used to better understand board member makeup. Additionally, the skills matrix can be used to identify gaps in board composition.
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About The Author
- Director of Business Development and Government Strategy
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