From Nomination to Appointment: How to Build Transparency and Trust

For many privately held and family-owned businesses, appointing a Non-Executive Director (NED) is a critical milestone.

The right NED brings external perspective, governance experience, and strategic oversight. Yet, unlike listed companies – where well-defined and regulated processes for board appointments have become the norm – private entities often lack consistent practices. This absence of clarity and transparency can undermine trust at the very moment when it is most needed.

Why Transparency Matters

Transparency in the nomination and appointment process signals to prospective directors, shareholders, and stakeholders that the organisation is serious about good governance and accountability.

A transparent process:

• Attracts stronger candidates: High-calibre NEDs are more likely to consider joining if they see a professional, fair, and well-structured process.
• Builds trust with stakeholders: Shareholders, employees, and business partners gain confidence when they know that appointments are based on merit, rather than on convenience or favouritism.
• Sets the tone for governance: The appointment process is often the first real glimpse that an NED gets of how the business operates. A process marked by openness and consistency lays the foundation for a healthy board culture.

Importantly, tools such as a board diagnostic (a snapshot of where the board currently stands in terms of governance and its alignment with purpose, performance, sustainability, and conformance) can add depth to the process. Sharing the results of such a diagnostic – or even providing the final candidate with the latest board evaluation report – demonstrates transparency and allows the incoming director to conduct their own due diligence. This not only builds trust but also ensures that the new appointee understands the board’s current realities and where their contribution will matter most.

The Risks of Opaqueness

When the process is inconsistent, unclear, or shrouded in secrecy, it creates apprehension and mistrust. Some of the long-term risks include:

• Reputational damage: Perceptions of “insider deals” or family bias can weaken credibility externally.
• Board dysfunction: Appointing directors without alignment on roles, skills, and expectations may create friction or disengagement later.
• Talent drain: Strong candidates may decline the opportunity – or exit prematurely – if they sense that the process lacks professionalism.
• Weak governance outcomes: An ill-considered appointment can dilute board effectiveness and erode the organisation’s ability to adapt or scale.

Studies in governance highlight that inconsistent practices in director appointments often lead to higher turnover, reduced board cohesion, and diminished investor confidence – all issues that can linger for years.

What Good Looks Like

Borrowing from listed-company practices, privately-held and family businesses can adopt a straightforward yet powerful framework by ensuring that they:

1. Define criteria upfront: Be clear on the skills, experience, and behavioural attributes required. Publish or communicate these internally.
2. Nominate with process: Use a structured nomination stage through a committee or trusted advisor rather than relying solely on informal networks.
3. Interview and assess consistently: Provide equal opportunities for candidates to demonstrate fit and contribution.
4. Document decisions: Record the rationale for selection and communicate it appropriately to stakeholders.
5. Onboard transparently: Ensure that the appointed NED understands expectations, board culture, and governance frameworks from day one.

First Things First

If your organisation is considering appointing a new NED, take the opportunity to strengthen both your governance and your reputation. A board diagnostic or board evaluation report can not only highlight where your board stands today, but also provides a powerful platform for engaging with prospective directors in a transparent and credible way. In doing so, you give candidates the confidence to join and also ensure that your board is positioned to deliver the performance, sustainability, and conformance that the business deserves.

A Trust-Building Opportunity

Ultimately, the process of appointing an NED is about more than filling a seat at the table. It is a moment to demonstrate governance maturity, signal fairness, and strengthen the organisation’s reputation.

By moving from opaque, ad-hoc decision-making to a transparent and well-defined process – and supporting it with diagnostics or evaluation insights – businesses lay the foundation for trust. And in the boardroom, trust is the most valuable currency of all.

Image: © kate_sept2004 via Canva.com