How many boards is too many?

Many directors struggle with the question of how many boards are too many. The AICD recently spoke to experienced chair and director, Michelle Beveridge GAICD to understand the complexities of overboarding and how to best navigate choosing the best number of board roles.

Some directors may feel like they’re drowning when taking on too many board roles, a practice commonly known as overboarding. When a director sits on an excessive number of boards while working in a full-time executive position, some say their ability to effectively serve their organisations is weakened. The exact number of seats defining overboarding is in contention, but with the rising number of risks and challenges facing directors today, the concern over time pressures is a valid one.

The magic number

Every director differs in the number of duties and the amount of stress he or she can handle before reaching a tipping point, so defining a fixed number of board roles that falls within the reasonable boundaries of a director’s capabilities varies. For some, two board seats will suffice. Others can handle between four and six seats, which seems to be the maximum recommendation. 
 
Beveridge says it's harder for those with full time jobs to take on one or two board roles. “When I was an executive, I had at least one board position all the way through my career, because I found the roles complemented each other. Being on a board helped me be a better executive and vice versa, but I couldn't have done more than one.”

For directors who are also CEOs, the number of boards on which they sit may be even less than those of standard directors, who may sit on two or three boards. “It can get difficult because you can't dedicate as much time to the board, as your executive role gets in the way. It really comes down to what's needed. Some seats require a lot of time spent with follow-up items afterwards. So, there may be a lot of discussions in between official get-togethers. Because of this, I have seen with some of my colleagues that the demands of their day jobs have gotten in the way of their board positions.”

Beveridge currently sits on three boards, while also sitting as an independent member on three others. “I'm a naturally busy person, so I'm quite happy having lots to do. But I think you’ll find that if you've got board members who are not contributing, not reading the board packs and not asking the right questions, it’s pretty obvious.

“For me, because it’s my full-time job now, I make sure I spend the time because that's what I do for a living.”

The consulting conundrum

The possibility of conflict of interest between boards and organisations can also occur, particularly for consultants. “I’ve been very careful to make sure that none of the companies I’m involved with are doing business with any of the others. You can’t let them get in the way of each other.”

Beveridge does no consulting outside her board work as it becomes difficult to manage time effectively. In a 30-hour work week, she works hard for three days and then has four days off. “That gives me huge flexibility.”

Practical tips to avoid overboarding

Do your homework into organisations before getting involved. “I got involved with an organisation where the demands on my time were actually more than directorship. I ended up being a quasi-executive getting pulled in to do things because they literally didn’t have the executive management team to do the work.”

If directors work across multiple organisations, they can't afford to be a de facto CEO. She says directors need to ensure there is a strong management team and that they know their role, so they can identify as a director without getting too involved in the detail.

One way of keeping out of the detail is through delegation, and Beveridge believes that’s where AI can play a key role. She says once a confidentiality issue of using AI is worked out, the technology can be critical for summarising board papers. 

“Not strategy, of course, but compliance,” she says. “The things you read in every meeting that are always the same. You can get AI engines to do that for you and then highlight what's different from the last report or an area where there might be an issue emerging that needs to be flagged.” She speculates that in the long run, AI might perform better than humans at certain tasks.

“It will certainly help management in putting board papers together, because they can use AI to help them organise and construct them. That way, I might spend less time finding grammatical errors in a board paper and more time actually reading something that's meaningful.”

Key Takeaways

• The maximum recommended number of boards a director should sit on is four to six.
• Sitting on more than two boards outside your full-time position may lead to ineffectiveness and feeling overwhelmed.
• Consulting outside your board work may lead to conflicts of interest.
• Do your homework on organisations to ensure they don’t expect more of your time than you’re willing to give.
• Use AI to save time for compliance tasks such as collating board papers.

Michelle Beveridge GAICD is a chairperson, committee and board member. She is currently Employer Director at Cbus Super and Cbus Property, as well as Chair of the Audit and Risk Committee at Charles Sturt University and Chair of the FARM Committee and NED Leukaemia Foundation.