There are probably many more than seven reasons to become a board director but here are some of my primary thoughts. These come about as a result of a presentation I gave several months ago to the alumni of MIT’s Sloan School of Management. If you were previously considering board service but unsure, this should substantiate your ambition:
According to a 2013 study by PricewaterhouseCoopers, 54% of directors said that their primary motivation for sitting on a board is intellectual stimulation. And, in most cases, intellectual stimulation is what you will receive! Boards, by definition, focus on the big picture of the company. This includes strategic planning, CEO succession planning, M&A and IT strategy. These are complex and multi-faceted subjects with major implications and thereby requiring immersion and effort. Furthermore, as a board director, your engagement will be on a part-time basis and as such the intellectual challenge will be magnified.
As a board director, you will get exposure not only to a company different than the one you work at (assuming you are not retired) but it is possible that you will learn about a new industry and perhaps even experience the functioning of a business in a novel and particular geography. The size and stage of the company which you are a director of may also be inconsistent to that which you are accustomed. This variance will provide opportunity to develop your skills, experience and competencies.
Additionally, in many companies sitting on an outside board is a precursor to becoming CEO or other major line responsibilities.
If governance is done right, your board seat will provide you with a whole new set of contacts. In the not so distant past, a board seat might be just another venue in which to engage with other senior executives you already know or have at least a passing familiarity with. Today, most boards are far more heterogeneous and thus an excellent opportunity to expand your network. And it will not be expanded with just anyone. Those you meet in the boardroom will be similarly accomplished and astute individuals who should enrich you both around the boardroom table and beyond.
This should not be misinterpreted but simply put, being on a board will raise your profile. This can result in some indirect improvement to your business or career. In this case it is important to be mindful of potential conflicts but for the sake of comprehensiveness this is a dividend worth thinking about.
Some view board service as an opportunity to give back. This can be particularly true in the case of start-up or smaller company boards. In these cases, compensation may be minimal or even non-existent thus the main motivation is providing your expertise and experience to facilitate the growth and success of a business. In the case of non-profits, this is of course, the main motivation.
Supplement Your Income
When I began recruiting board directors 18 years ago, compensation was of minimal consideration for board candidates. Most were CEOs and retired CEOs who usually stated that compensation was not a factor in their decision to join a board. Compensation for directors back then, by the way, was quite a bit less than it is today. In September of this year Towers Watson reported that median director compensation for 474 publicly traded companies in the Fortune 500 was $239,918 in 2013. Of course, most companies are not in the Fortune 500 and thus not at this level of director compensation. But being a board director can provide a not-incidental supplement to your income.
Who can deny the cachet that comes along with being a board director? However, I mention this last deliberately. If you are interested in board service simply because of the perceived prominence it provides, think again. Being a good board director is a lot of work and responsibility. It is not simply a “feel good” opportunity but rather a job with specific roles and responsibilities including legal, fiduciary and ethical.
It is no secret that board service is gratifying and a goal for many. The reasons for this, as seen above, are ample and varied. Conversely, the responsibilities are real and can be quite significant. Insight and information will go a long way to equip you appropriately!