The importance of group-fit in new director selection

Abstract

Purpose – Director selection is an important yet under-researched topic. The purpose of this paper is to contribute to extant literature by gaining a greater understanding into how and why new board members are recruited. Design/methodology/approach – This exploratory study uses in-depth interviews with Australian non-executive directors to identify what selection criteria are deemed most important when selecting new director candidates and how selection practices vary between organisations. Findings – The findings indicate that appointments to the board are based on two key attributes: first, the candidates’ ability to contribute complementary skills and second, the candidates’ ability to work well with the existing board. Despite commonality in these broad criteria, board selection approaches vary considerably between organisations. As a result, some boards do not adequately assess both criteria when appointing a new director hence increasing the chance of a mis-fit between the position and the appointed director. Research limitations/implications – The study highlights the importance of both individual technical capabilities and social compatibility in director selections. The authors introduce a new perspective through which future research may consider director selection: fit. Originality/value – The in-depth analysis of the director selection process highlights some less obvious and more nuanced issues surrounding directors’ appointment to the board. Recurrent patterns indicate the need for both technical and social considerations. Hence the study is a first step in synthesising the current literature and illustrates the need for a multi-theoretical approach in future director selection research.