Although outside board-member selection still depends on referrals, more firms are using formal searches and recruiters. "This business of identifying, selecting and attracting board members is not difficult from the search point of view," says Ed Cloutier, president of recruiter American Executive Management. "The process to agree on an ideal member can become convoluted and difficult before a search begins."

Cloutier notes the example of a major EPC firm whose board added a veteran executive from a large global management consulting firm to improve operational effectiveness. "They spent millions with little to show for the effort," says Cloutier. "He left the board a few years later. Poor choices of directors lead to indecision, lost time and often excessive costs." He says industry-experienced human-resources professionals make good board members. But Paul Marchionna, vice president of construction at recruiter Specialty Consultants Inc., Pittsburgh, says that with more retiring industry executives, there are more people interested in board-type positions than there are openings.

"My advice to firms looking to bring in outside board members is to first improve their governance process," says Doug Thompson, head of Thompson Consulting LLC, a design-firm governance adviser. "If you don't have things cleaned up, you might not be happy with who you are able to attract to your board."

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