Trophy Collectors – Directors Who Are Over-boarded
Updated: Sep 15, 2022
While reading the profile of a director in a governance magazine, I drew two important and connected conclusions. First, and most importantly, the profiled director was completely over-boarded. The second issue which is related to the first is the number of boards this director sits on, effectively reduces the opportunities for increasing board diversity across all demographics.
The profiled director currently holds 11 governance roles. Nine are business/corporate boards (three listed), one is a government appointment; one is a not for profit (NFP), they also Chair three of the 11 boards.
Given the discourse on the need to increase opportunities for women directors, alongside the need to ensure sufficient positions are available for aspiring directors (male/female). The number of governance roles they have highlights a significant issue for many boards; directors who are over-boarded and who are blocking access for new entrants.
Unrelated to this article, but of equal importance is the impact that over-boarded directors have on organisational performance. Frankly, given many boards' aversion to any form of analysis of individual director performance. Identifying the impact of over-boarded directors on organisational performance would be exceedingly difficult to determine.
Putting aside the impact on performance, over-boarded directors may have. What would the average time commitment for this director be if they were to undertake the required, expected duties for each governance role they hold? To calculate the number of hours required over a one-year period, I have used internationally accepted best practice expectations. While accepting the limitations of this method, it provides a clear insight on the level of workload they have and the problems this may cause.
The hourly requirements used are averages. Some boards would need more and others less. That said, I believe the numbers below are not excessive and in some cases may be described as too light.
These hours do not consider extra meetings required for committee meetings or meetings required during a crisis, merger, takeover, etc. While these additional meetings are relevant, I chose not to add these in, as their inclusion may shift the focus from the nexus of this discussion – over-boarding by directors and its ramifications.
The time requirements for the three core functions of a director’s role were:
Meetings: seven meetings per annum, each taking six hours (including travel) = 42 hours per board, per annum
Preparation: preparation time for seven board meetings, six hours per board, = 42 hours per board, per annum
Staying Current: researching and staying current with industry/sector trends, developments, etc. six hours per month per board = 72 hours, per board, per annum
Chairs Role: for each chair's role, an extra allowance of 12 hours per month = 144 hours per board, per annum.
Total hours as a director for the 11 board’s = 1716 hours per annum.
Additional hours for Chairs Role = 3 boards *144hrs = 432hrs
Adding the three Chair’s requirements to the director roles requires the director to allocate 2148 hours per annum to her governance portfolio.
It should be noted that no allocation of time has been made for the director to undertake ongoing self-learning, which in my view, is, or should be, a critical element of every director’s continuing professional development.
By way of support for this calculation method, a recent European Corporate Governance report identified that directors work on average 215 hours per board. The National Association of Corporate Directors suggested an annual average of 227.5 hours on board-related matters. The American Bar Association suggested an average slightly higher at 250 hours.
To accommodate the calculated hours (2148), they could work seven hours a day, seven days a week, for 44 weeks of the year. Alternatively, if they had one day a week off, they would work 51 weeks per annum. Working a 40-hour week, they would need to work 54 weeks' per annum. If the director were an employee, the chargeable hours per annum, after deductions for holidays, sickness, statutory holidays, etc., would be 1476 hours per annum. This is a staggering 672 hours or 17 working weeks (over 4 months) less than what they are committed to in their current director roles.
Now, explain to me how their workload is conducive to them or any other director giving the required thought, time, and energy to their role, little alone his or her life outside of work.
They are over-boarded, perhaps by three to five governance roles. Highlighting the second identified issue; how can we grow the pool of experienced directors if we have an elite group of directors who are just "trophy collectors".
Over-boarding is a significant issue and one that is not a popular topic of discussion at the board table. Why? Because it means having a tough conversation with directors who, in some cases, clearly have too many governance roles. Of course, it may well be you who is over-boarded.
Chairs and directors need to have a conversation, one that includes the executive team, to discuss how over-boarded directors may be impacting the performance of the board. If your board is brave enough to have that conversation, here are some suggested questions to start with:
How many, is too many boards?
What is the standard of performance we want from our directors?
How will we measure that?
What process do we have to keep track of the number of boards our directors sit on?
Is there a formal process of request that a director must use before considering or accepting another role?
For a director to reach our desired level of performance, how much time should they have available to devote to the roles requirements: meeting preparation, staying current on industry/sector trends, etc., committee work, self-guided learning, etc.
Starting with those questions will at the least illicit some discussion and probably some interesting insights into your board's view of the commitment required to be an engaged and proficient director. It will also identify those directors who see this whole matter as a storm in a teacup. However, that kind of attitude should raise a red flag. If directors do not see over-boarding as an issue, what else are they missing or ignoring, if it does not suit them?