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The importance of group-fit in new director selection

Natalie Elms (School of Accountancy, Queensland University of Technology, Brisbane, Australia)
Gavin Nicholson (School of Accountancy, Queensland University of Technology, Brisbane, Australia)
Amedeo Pugliese (School of Accountancy, Queensland University of Technology, Brisbane, Australia)

Management Decision

ISSN: 0025-1747

Article publication date: 13 July 2015

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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.

Keywords

Acknowledgements

The authors are grateful to Dr John Nowland for taking the time to review and comment on an early version of this paper.

Citation

Elms, N., Nicholson, G. and Pugliese, A. (2015), "The importance of group-fit in new director selection", Management Decision, Vol. 53 No. 6, pp. 1312-1328. https://doi.org/10.1108/MD-10-2014-0598

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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