Many executives are beginning their board careers while still working in corporate roles, according to Kylie Hammond, CEO of Director Institute.
They are proactively seeking opportunities to serve on company boards including non-executive director and advisory board appointments.
“Executive directors are often restricted contractually from holding external employment engagements, and will need to seek permission to serve on an external company board,” said Hammond.
“With the growing emergence of ‘portfolio careers’ and the increased demand for next generation board directors, HR professionals are now faced with a growing number of requests from executives wishing to serve on external company boards.”
Should HR try to accommodate executive directors who want to commence their board career and hold an external company board appointment?
Is there an opportunity to widen the horizons of a company by encouraging executive directors to take on these types of engagements, provided conflicts of interest are correctly managed?
The answers are not simple and will be dependent on a range of factors.
These include the type of board appointment involved, goals for the company, the performance of the executive director in question, the sustainability of the board in terms of direction and what the expected benefits to the company and individual might be.
“Such aspects will ultimately influence whether it is a good decision for HR to encourage some executive directors to hold a board director position that is external to the company,” said Hammond.
In many cases, Hammond said the executive director who is starting out in their board career will be initially invited to join a not-for-profit or community board role.
This is where many board directors earn their stripes and gain their early board experience.
“Board service may provide an opportunity to gain experience that cannot be achieved within the current executive’s role and gain insight into other areas of how a business operates, such as corporate finance, strategy, sales and marketing, as well as learn how to run and contribute to a board meeting,” said Hammond.
“Many executives who have had a successful corporate career express a desire to make a difference, give back and serve in the not-for-profit community.”
Hammond added that this may complement an established corporate social responsibility (CSR) program and assist the executive to develop valuable board director experience at the same time.
Moreover, board appointments on a charity, sports, arts or community-based board usually boost the individual’s public profile. Provided the time commitments are manageable, it can create a good outcome for all the parties.
“There are several well-known examples in the market where firms such as Big 4 Professional Services firms have actively encouraged senior executives to serve on not-for-profit boards in order to contribute their skills, expertise and capability at board level,” said Hammond.
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