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The business world is becoming increasingly complex, organisations must navigate ever-changing social attitudes, demographic shifts, and technological disruptions. In doing so, its imperative organisations not only understand these trends but respond to them by harnessing them to their advantage.
The phrase 'diversity' has become a bit of a catch-all term in the boardroom. While there has been much discourse on diversity, particularly around improving gender, age and cultural diversity, another critical aspect of boardroom diversity is the depth and breadth of subject matter expertise.
Does your boardroom have a balance of skills and diversity for oversight, governance and decision-making?
Ultimately tasked with providing good governance of an organisation, board members are also tasked with making decisions that affect the future of the company. While the board should be able to ask the right questions, they must also fully understand the business itself, its market, its competition, its customers and the products/services being offered by your organisation. In this capacity Subject matter experts can be invaluable resources when it comes time to make decisions.
‘Effective decisions result from a systematic process, with clearly defined elements, that is handled in a distinct sequence of steps’ [Drucker, 1967].
Whilst Drucker's statement still rings true, in today's data-driven world, decisions are increasingly only as good as the quality of information or expert opinion decision-makers have access to.
As a result, it is critical for companies to have access to the best possible data. This means boards must have a diversity of stakeholders who are considered subject matter experts to participate in the strategic decision-making process otherwise organisations run the risk of making decisions that could result in them getting left behind.
Subject matter experts not only add a balance of skills and diversity for oversight, governance and decision-making but having a mix of directors with different backgrounds and expertise bring different perspectives to the decision-making process. This enables boards to better align their decisions with stakeholder interests – a critical competency in securing a competitive advantage.
Know when to add external talent to your board.
In today's business environment, it's increasingly common for organisations to bring in outside expertise to help them navigate important decisions. For example, if your company is considering a merger or acquisition, you'll likely want to bring in a financial expert to evaluate the potential costs and benefits. Or if you're working on a new product launch, you might want to bring in an industry expert to give feedback on its viability.
Recognising when the appointment of a subject matter expert is the right step for establishing a strong board is an important consideration. If your organisation is experiencing any of the following, you may want to consider adding an additional member to your board:
- When you're expanding into new areas of business or new markets. This can be a good time to bring in a strategic partner or advisor who knows the industry and can guide you through the nuances of the business area or market.
- When you need to expand your knowledge base beyond what's available internally. For example, if a critical project involves developing a new product or service, it might make sense to bring on someone with expertise in that area rather than relying on the insights of existing employees.
- When there are major strategic changes coming down the pipeline (e.g., going from the startup phase into growth).
Fresh perspectives in the boardroom
The boardroom is not just a place for executives to discuss company strategy or make decisions. It's also a place for subject matter experts to share their knowledge, which can help drive profitable growth and innovation.
In fact, according to a study by McKinsey & Company, "Subject Matter Experts are the most important external source of information for boards."
This makes sense: The average CEO has access to a network of only about 150 people on average, who have relevant expertise in their industry. Yet many boards include members from outside the organisation who may have experience with similar companies or industries—and this unique perspective can be invaluable.
Here are five considerations for having a diverse board, and how to recruit and retain the right subject matter experts:
- Having a diverse board is an important part of any company’s strategy for profitable growth. In the current economic climate where the pace of innovation is accelerating, diversity in thought leadership can help drive your business forward.
- A well-rounded board brings together people with experience across many industries and functions who can bring new ideas into your decision-making process—and that will help you outperform your competitors over time.
Prioritising Your Needs
Specialist expertise can often be a very narrow field, so as a first step it is important to decide exactly what you want to get out of appointing a Subject Matter Expert. Their knowledge and insight can result in changes to many areas of the business from; manufacturing, product development, human resources, to sales and customer support, and even your marketing team could benefit from an SME serving in their specific areas.
Keeping an open mind is essential to this process. Industry experts also tend to be well-networked and can often recommend other individuals who can add value or insight to unique or industry-specific challenges. Taking a holistic view of the knowledge gaps within the board and providing transparency to Subject Matter Experts during the process can help in identifying hidden gaps you may not have considered. Giving thought to adjacent industries that serve the same vendors or customers or have business challenges that are compatible with your own can be useful. Often, your best opportunities to identify the right people reside in these adjacent industries.
So the first step is deciding on the top functions or capabilities you need an SME to deliver, which will provide clarity to your search.
Craft a Clear Job Description
Once you decide what your SME needs to accomplish, it is vital that you outline what role they will play in advising the board and supporting the decision-making process. Clarity on the capacity in which they will work with the organisation is key.
Will they function as part of a committee? Who will they be accountable to, and in what capacity?
If they’re not advising as board members, but via a committee, as subject matter specialists counselling executive management, how will the decision to support or implement their recommendations be taken and by whom – as with any other management proposal – and in turn, who will take responsibility for the success or failure of its implementation?
Crafting a clear job description that outlines their obligations, what is expected of them and how their advice and expertise will be leveraged can help ensure the necessary structures are in place to get the best from them.
Look in the Right Places
Unsurprisingly, these individuals are in high demand and rarely looking for new opportunities, rather they are usually employed and not actively checking job boards or platforms such as LinkedIn.
When seeking very specific candidates, ensure you’re looking in the right places. Boards should start by leaning on their immediate network and working with the executive management team to identify industry experts that might already reside within the group's collective talent pool.
Networking and industry events are obvious but useful avenues to explore when identifying and engaging with subject matter experts. Of course, this should be an ongoing focus of the boards and executive management team since this approach does little to assist time-sensitive or immediate boardroom needs.
Develop Your Own
Another viable long-term strategy is to proactively develop your own Subject Matter Experts. You may already have highly experienced, motivated leaders already in your organisation who have acquired a high degree of expertise and could become subject matter experts over time given the right focus and support.
This strategy will require some investment (in learning, credentials, time away from projects, etc.), but it’s worth considering. Providing growth and development opportunities like this for existing leaders is a great way to boost morale and foster a positive work culture that values team members. However, this approach does have its limitations, especially in instances where the expertise you seek is in areas outside of your domain.
Work With A Specialist Executive Search Firm
Finding Subject Matter Experts in very specific disciplines is just not that easy, but partnering with a specialist executive search firm with expertise in the FMCG or Food & Beverage industry can not only provide valuable insights into the talent pools, industry networks and individuals that can solve your problems and bring much-needed expertise into the boardroom across a range of functional disciplines. ELR Executive has been a leader in the Executive Search specifically for the FMCG industry for over 20 years.
In Summary, the answer is yes to this question. In fact, subject matter experts are becoming increasingly necessary in a boardroom environment. As companies grow and become more complex, their boards need to be able to provide strategic advice on topics that aren't directly related but still affect company performance. The best way for boards to do this is by bringing in experts across various functional disciplines who can help provide insight throughout the decision-making process, ensuring that boards are advising and supporting executives in achieving the strategic objectives of the business.
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