How Many Board Roles Can You Have?
Your capacity to manage multiple board roles depends on more than simply calculating how many meetings you need to attend.
Different stages of the business cycle require more or less board involvement. At one end of the scale, the board is in start-up or venturing into something new and will need a lot of input. At the other end of the scale, the business is established, the systems and processes are in place and tested, and the board will find themselves in more of a compliance and monitoring capacity whilst awaiting the next growth opportunity to commence.
The business resources will determine where the line between the executive management team and board management team sits. A business with limited resources either in start-up or non-profit in nature, will find there are more operational aspects to their roles than the board of a Top 200 ASX which can afford to be entirely strategic. Board members of some associations, NFPs and Charities may find themselves with personal actions to complete between meetings.
The affairs of the business will also impact the on board workload. A business involved in scandal or undergoing scrutiny in the form of inquiries and Royal Commissions will find themselves with more matters for discussion than others!
The complexity of the business must also be taken into consideration. A parent or holding company with multiple entities will have more to manage and oversee than perhaps a single entity might.
The way the board operates will also have a bearing. Does the Board Charter enable discussions offline? Can you expect to receive emails and calls between meetings or are board matters strictly attended to at board meetings? How detailed are the reports and how many can you expect to receive?
And then of course there are all the exceptions to the comments above. No two board roles are ever the same!
A wise Director once told me that the amount of boards a director can sit on, depends on their capacity to be able to effectively manage a board in crisis. In other words, if things blew up, can the director give the business the priority it needs? Can you be there for multiple ad-hoc briefings and determinations? Can you drop everything and be fully present for the board dealing with a crisis?
Up until 2020, a crisis was something that impacted a business, a region or maybe an entire industry because of things like natural disasters, horrific incidents, legislation changes, etc. But Covid 19 has since taught us that an event can occur that impacts multiple businesses and industries across the globe at the same time.
The question is no longer ‘do you have the capacity to respond if one of your businesses faced a crisis?’, it is now ‘do you have the capacity to respond if every board you sit on faced a pandemic or similar which affected all of them at the same time?’. Try and think of a business not impacted (positively or negatively) by covid 19.
It’s one thing to be able to manage regular meetings and standard workload, but if the inevitable occurs, can you be sure to give the board the time and priority it needs?
A final consideration is your personal ability to manage board work. Can you speed read? Can you absorb complex information quickly? Can you read between the lines or get to the ‘heart of the matter’ quickly? How much reflection time do you like to have? Are your board roles local or do they require travel?
The law does not specifically stipulate how many board roles a Director can have, but it does very clearly articulate the requirement for the Director to act in the best interests of the business. Having more board roles than you can manage effectively is clearly not in the best interests of any of the boards you represent.
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