The benefits of sitting on multiple boards
The main issue is worries over excessive time commitments and how this can impact board performance. Following the financial crisis of 2008, there’s definitely been a conscious effort to limit board memberships and mandate ‘responsible’ levels of commitment.
The other major issue is potential conflicts of interest. This is a problem that has been explored in detail by International Institute for Management Development in Switzerland (IMD), which has strongly stated that conflicts of interest at board level “constitute a significant issue in that they affect ethics by distorting decision making and generating consequences that can undermine the credibility of boards, organizations or even entire economic systems.”
It’s easy to see why these are both areas of concern that need to be watched closely. However, it would be wrong to say that this is the end of the debate.
Here at Admincontrol we believe that – when managed well – there are also distinct advantages to having directors who sit on multiple boards.
Sharing valuable knowledge and expertise
Board members with multiple board seats can contribute key knowledge and contacts that are sometimes essential to move forward. And they can do so without being unethical.
This is particularly true in sectors like technology where many companies, especially start-ups, “face distinct problems with regards to scaling and succeeding in a disruptive sector filled with constant market entrance and competition.”
Improved agility
Following on from the above, directors with experience of several boards have the right mix of ‘scaling’ expertise and industry partnerships to help chart a safe path forward. At Admincontrol, we see a clear trend in directors who previously sat on the board of large companies now sitting on boards of smaller companies. We also see movement in the other direction as younger board members establish their career. While small companies can learn to scale from large enterprises, large companies can also learn from the agility of the small businesses. So this trend is beneficial either way.
They can also help to manage rapid shifts in industries, and often have experience of different regulatory environments. Living as we are in such disruptive times, these are assets that are just as useful to other sectors as they are to the tech and start-up world.
A broader perspective
Another basic fact we shouldn’t forget is that directors who hold multiple roles are simply very experienced at the what they do. As corporate governance expert Professor Anne Wyatt puts it, “being a ‘professional director’ allows them to build their experience and contacts and gives them a broader perspective. They learn to work more closely with other directors, develop greater self-awareness and become more effective at governance. Because they have less time, they are also less likely to be inadvertently drawn into executive management duties, which would be at odds with their monitoring and advisory responsibilities.”
How to manage a board’s time more successfully
As we’ve already established, the big issue is time.
Today, however, this is a potential risk that can be mitigated by introducing digital technologies that make the working of the board much faster and less location dependent.
A board portal, for example, will help all your board members to work paperless and far more efficiently, no matter how little time they have. Important documents are always available, online and offline, in a secure user-friendly solution via the web or apps – so board members can effectively switch between their duties. We know digital directors who have access to board documents from up to 15 companies in the same app!
Of course, a board portal won’t solve other potential issues like conflict of interest. But it will help to ensure that all board members can work as effectively as possible, securely, no matter where they are or how time–poor they are.
Find out more about our board portal platform by contacting us today.