“It takes a lot of time to sit down and really go through in detail, and think about not just what’s in the board papers, but what is missing and what ought to be there. As a director you have to be more sceptical than an auditor. You always need to think of what’s missing. There’s a creative and commercial side to the role, as well as an oversight one. Sometimes you can contribute through flashes of genius, but often it just requires plenty of time to think about the issues.”
There’s no limit to the amount of background work directors can do, but it’s also important for them to leave some time set aside for when things go wrong.
“When things are good, having multiple boards isn’t an issue,” Garland McLellan says.
“But when something goes bad, suddenly as a director your workload can increase by several hundred percent. And if the economy goes bad and all your companies go bad at the same time, well, you can find yourself working 20-hour days.”
The Australian Shareholders’ Association’s corporate governance policy suggests non-executive directors take on no more than five roles with an “average” workload. It considers a chairmanship to be worth two other directorships, in terms of workload.
This recommendation comes from an ASA study that found a non-executive directorship takes 37 days per year on average to execute, which means five directorships equates to 185 days per year of work, allowing directors to have “spare capacity” in case a crisis situation emerges.
Directors get overloaded because the people who recruit board members want people with experience, while not being open to people who want to be on boards, Garland McLellan says. “It’s one of those board conundrums, that people like the Australian Institute of Company Directors are trying to break with their mentoring and education programs.
“I’ve found the not-for-profit sector to be a great training ground for board members. It’s a great introduction.
“And then, if enough people are trained and experienced enough to do these roles, hopefully we won’t have this issue in the first place.”
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
