How Much Time Should Directors Spend on Board Obligations?

For many accomplished professionals, securing a board seat is a significant milestone. However, joining a board requires a considerable commitment.

One question I’m often asked is, “What do you enjoy most about being on a board?” For me, the primary attraction is engaging with intelligent, skilled, and often younger executives who bring fresh insights and deep knowledge of their industries. Collaborating with these dynamic leaders is both inspiring and educational.

The Commitment Beyond Board Meetings

While board service is rewarding, it’s also demanding. Although boards may meet formally only 8 to 10 times a year, there are typically additional committee meetings to attend. These may include Audit, People, Culture and Remuneration, Risk, Technology, and Nomination Committees, each with its own set of responsibilities. Chairing a committee, in particular, requires extra preparation and dedication.

A recent board role I reviewed required 7 full-day board meetings per year, 5 half-day meetings, 4 quarterly committee meetings, and an annual strategy session of one to two days. Outside these meetings, directors are expected to dedicate up to 3 days per month for preparation and other board responsibilities.

Preparing Outside of Meetings

Most board work happens outside formal meetings. This includes:

Reading Board and Committee Papers: It’s essential that all directors read and understand the materials before meetings. Management invests significant time preparing these reports, which can exceed 100 pages, with committee papers similarly extensive. I prefer to spread the reading over several days, allowing time to digest the material and focus on key issues.

Liaising with Executives: As Chair of several Audit Committees, I spend additional time outside meetings working with the CFO, finance team, and auditors. My goal is to address and resolve issues proactively, leaving only the most critical topics for discussion at formal meetings. This approach improves productivity and allocates time to address unresolved or emerging issues more effectively.

Connecting with Colleagues: Engaging with fellow directors and executives between meetings is invaluable. I often have discussions with the Chair and other directors to exchange insights, identify potential concerns, and build consensus on challenging topics. These conversations provide additional context and help streamline decision-making.

Staying Current on Industry Developments: Directors must stay informed about the broader landscape in which their companies operate. This means regularly reviewing company announcements, presentations, annual reports, and industry news.

Continuing Education and Development: In Australia’s evolving corporate landscape, directors need to stay up-to-date on critical issues like the ESG (Environment, Social, and Governance) framework. Many of the major accounting firms provide talks and round table events on issues of the day. I try to attend many of the talks, including courses on ESG, to ensure I understand current regulations and reporting requirements, and to enable me to contribute meaningfully to relevant committee discussions.

Navigating Artificial Intelligence (AI) Challenges: As more companies adopt AI, new responsibilities arise, including ensuring ethical use, managing data privacy, understanding regulatory compliance, and assessing workforce impacts. Directors must stay informed on these evolving challenges to provide effective oversight.

Handling Crises, Acquisitions, and Unexpected Issues

Directors must also respond to unexpected situations, such as crises, acquisitions, or divestitures, which demand immediate attention outside the usual board schedule. These situations can add to the time commitment and require directors to prioritize board duties at short notice.

Maintaining Professionalism and Reputation

It’s crucial for directors to uphold professionalism and protect their reputations. Missing meetings or failing to prepare adequately can harm a director’s standing and, ultimately, their career. To maintain credibility and effectiveness, it’s essential to avoid overcommitting and ensure one can fully meet the expectations of each role undertaken.

Proxy Advisors

Proxy advisors like Glass Lewis and ISS closely monitor the number of board roles directors hold, as they believe extensive commitments could impact directors’ focus and effectiveness. Proxy advisors often raise concerns about directors with multiple commitments, cautioning companies that additional obligations may detract from a director’s ability to prioritize the company’s needs.

A recent report by Ownership Matters, published on September 11, 2023, highlights the challenges of holding multiple board seats. Out of 1,381 directors of ASX 300 companies, only 287 (20.8%) held more than one board seat—a statistic close to a 2014 finding (19.3%). Of those holding more than one appointment, women held a slight advantage in the number of seats per director, with female non-executive directors holding an average of 2.5 board seats compared to 2.2 for men.

The pool of ASX directors is also broadening. Unlike previous years, when a few directors held many board seats, today no director (male or female) holds five board positions within the ASX 300, and none hold four seats within the ASX 100. Among the 287 professional NEDs (Non-Executive Directors) who hold multiple board seats:

• 207 held two board seats,
• 66 held three seats,
• 13 held four seats, (10 of these were women), and
• One NED held five board seats but resigned from one following the 2022 AGM.

Balancing Workload and Lifestyle

Currently, I serve on three ASX boards and several unlisted boards. I thoroughly enjoy the work and typically find myself engaged for at least two intensive weeks each month, especially during February and August when financial results are published.

Balancing my board commitments with a fulfilling lifestyle has taken careful management, but I feel I have found the right balance.

About the Author: Jon Brett

Jon Brett is the Non-Executive Chairman of Infomedia (IFM), a Non-Executive Director of Corporate Travel (CTM) and Chair of the Audit and Risk Committee. He also serves as a Non-Executive Director of Raiz Invest (RZI) and is the chair of the Nomination, Remuneration and Culture Committee.

Jon is also the author of the very successful podcast series The Taking of Vocus, chronicling the extraordinary rise of Vocus, what went wrong with the M2 merger, and the eventual privatization of Vocus. The podcast is accessible via his LinkedIn profile Jon’s book The Taking of Vocus, is available on Kindle. LinkedIn Profile