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Men in Suits

Can a director serve on more than one board?

Can a corporation director serve on more than one board? Yes, the answer is yes. Should someone serve on more than one board? It depends.

There are several dos and don'ts associated with this behaviour. The number of boards you serve on is determined by a variety of external factors, such as your free time, your job on each board, and the companies you serve.

Why do people serve on several boards?

Supply, demand, and availability are all factors to consider.

Members of the board are natural experts in their fields. The number of firms looking for this knowledge typically outnumbers the number of qualified individuals.

Whether it's cybersecurity, public relations, human resources, environmental sustainability, or just plain governance, a candidate may easily be solicited by three companies at the same time. There is no rule stating that they must accept all of them.

The advantages of serving on many boards

We can divide this into benefits for the director and benefits for the organisation.

The director:

  • Can broaden their horizons by delivering their knowledge in a unique way to each organisation. This is especially true when businesses differ in size and industry. True personal development will take place here.

  • They have larger networks of colleagues.

  • They will definitely learn the fundamentals of time management at the board level as they balance several tasks.

For the company:

  • The company has an experienced and active director in the industry. This frequently translates into up-to-date, well-informed advice on critical business decisions.

  • The organisation has significant market insights that it may implement into its strategy.

Should I serve on more than one board?

As previously said, there are benefits. And serving on numerous boards is a long-standing industry practice, so you wouldn't be the first to do so.

Finally, the response can only be 'yes' as long as you don't jeopardise your own or the company's safety.

Overboarding is one of the risks of serving on numerous boards.

As you sit on multiple boards, consider this: how many are too many?

Over-boarding occurs when the number of boards becomes too much of a burden for the director to provide considerable expertise.

Many corporations and investors complain because they know they aren't getting a director's entire attention.

For example, BlackRock, the world's largest investor, has specifically advised against over-boarding since they do not want the director to feel overburdened.

Here are some symptoms that you're going too far:

  • Your coworkers are very critical of your ability or level of engagement.

  • You can't seem to get a break.

  • During a boarded emergency, you are unable to free up time.

The risks of serving on numerous boards include a conflict of interest

What happens if you want to serve on two boards for competing companies?

Nothing legally prevents you from doing so. However, it will almost never be permitted.

A director who advises and develops a strategy for a competitor will not be desired by a company. So, under normal circumstances, you would not be eligible to serve on the second board.

If you're on two boards and detect a conflict of interest in this way, report it right away. It is your responsibility as a director to identify any conflicts of interest, and the chair will make the final decision.

Our Directors’ Institute- World council of Directors can help you accelerate your board journey by training you on your roles and responsibilities to be carried out in an efficient manner helping you to make a significant contribution to the board and raise corporate governance standards within the organization.

Our ESG Expert certification will help you to amplify your understanding of corporate governance in a detailed manner paving a way for you to become a globally recognized ESG leader.

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