Juggling Multiple Board Positions
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Wondering whether to take on another board position, but unsure of the responsibilities that would entail? Why not hear from someone who has walked a mile in those shoes?** Lord Charles Powell, British politician and businessman**, shares his experience of working on the boards of several large organizations. From his insight, gain a view of the realities of juggling multiple board positions, from navigating conflicts of interest to preparing for meetings and even making time to learn new skills.
GAIN ACTIONABLE INSIGHTS TO:
- Why you shouldn’t necessarily be deterred from accepting a board position in a business you have little or no prior experience with
- How to make sure you’re not biting off more than you can chew with too many board positions
BOARDS: THE LONG AND SHORT OF IT
I’m on the board of four large, public companies: Louis Vuitton Moet Hennessy(LVMH), Jardine Matheson, Hong Kong Land, and Northern Trust Corporation. I’m also on the advisory boards of a few other companies. When you’re on an advisory board you do not take a statutory role with specific obligations. As you’re simply giving advice,there is less potential for conflicts of interest.
My first board position was with the National Westminster Bank, which was Britain’s biggest bank at that time. The Chairman of the bank had known of me and wanted to have someone on board with international expertise, including knowledge about Asia, which wasn’t widespread at that time in British business.
It could also be that you are introduced to a new company because you’ve worked with someone connected to them. Jardine Matheson had a number of Caterpillar agencies in Taiwan, Southern China, and so on. As I was on the board of Jardine Matheson, I was brought into contact with Caterpillar. The Chairman approached me and asked me to join the board at Caterpillar. As long as I didn’t get involved directly in decisions involving dealerships, I was clear of conflicts.
Boards are no longer the old boy, old school tie network they were once famous for being. Nowadays, you can register yourself with headhunters for non-executive board positions as well. I’m sure headhunters are responsible for at least half, if not more, of non-executive board appointments today. If you’re looking for an additional board to contribute to, headhunters are a good place to start.
When selecting boards, a general rule of thumb you should follow is to avoid getting involved in companies that have overlapping interests. For example, I’m on the board of Louis Vuitton so I’m obviously not going to seek to join the board of another fashion house such as Gucci. However, if you do find that a potential conflict of interest may arise, declare it openly and take yourself out of the discussion.
I was on the board of Caterpillar, which is a heavy machinery company. I was also on the board of Textron, which builds business jets, helicopters, and so on. Textron also had a smaller business that built cranes. While Caterpillar didn’t actually build cranes, I could see that cranes came pretty close to heavy machinery. So if there was a discussion about Textron cranes, I would simply excuse myself from that conversation so it wouldn’t impinge on my Caterpillar interests. This is a small illustration of the kinds of issues that could arise if you’re on multiple boards.
Where a conflict of interest can become a real issue is in Government and Parliaments. I’m a member of the House of Lords in the UK, and I serve on several committees – at the moment, I’m on the National Security Strategy Committee. Sometimes, our discussions involve defense. I also advise defense companies, So my interest has to be declared publicly in the Committee’s reports so that people can factor this information in.
Members of the House of Commons are much more restricted in working with businesses. However, quite a few members of the House of Lords are on boards, and it’s not seen as an obstacle as long as you declare your interests. You’re on your honor to not let your interest interfere with your judgment.
With conglomerates with multiple business lines, you have to be particularly alert to any competing interests that may come up. There are areas where two companies whose boards you’re on may do business with each other. For instance, LVMH may lease a premises from Hong Kong Land. If you're an executive director, you won’t be engaged in any negotiations between the two, but you should still make sure that both companies are aware of your roles.
MANAGING YOUR RESPONSIBILITIES
Before you risk taking on more than you can handle, make sure you’re committing intelligently in a way that allows you to add real value. The first thing you should know is how often the boards you’re sitting on meet. There’s no point in joining boards if you’re going to constantly have a conflict of dates. You must keep your commitments separate and dedicate yourself to each of them equally. Bear in mind that you’re being paid to show up, to support the interests of each company’s shareholders, and it is your duty to make sure you’re not avoiding one meeting just because it conflicts with another of your board meetings.
Different boards meet with different regularity. Most of my boards meet between four to six times every year. There are some companies whose boards meet every month! Before you accept a board position, make sure you’re able to commit to attending all of the meetings.
You would also have to make sure the companies you’re working with are comfortable with your other commitments. For regulatory purposes, you would have to declare all the boards you sit on to shareholders in the annual report. Nobody should be kept in the dark when it comes to your interests or your commitments.
Also be prepared to put in the hours. Preparing for board meetings is hardly a walk in the park. Especially these days, because regulatory issues are so complex, you need to invest a great deal of time into understanding these aspects. Some boards I’m on dedicate 80% of their time to addressing regulatory issues, and only 20% is spent on the business aspect of things.
When I say regulatory issues, think stacks of paper that are inches thick. Sometimes, the reading you have to do to prepare for a board meeting can extend to over 1000 pages. Do you have the time and willingness to put in the hours for each of your board appointments? Are you able to carve out spaces of time that will allow you to prepare sufficiently?
For me, long-distance flights are the answer. I use my flights between the UK and Asia or America as the quiet time I need to get up to speed on my reading and preparation before my board meetings. If you’re going to juggle various board positions, you will always need to find a window during which you can get all your reading done.
KEEP UP TO SPEED
Don’t restrict your reading to the bare minimum needed to get through your board meetings. The big challenge today is to keep yourself current – not just with updates from the company, but also developments in the sector and the broader business environment. It’s crucial that you keep up to speed with happenings in the industry to be able to contribute impactfully.
Most companies like to have a good mix of expertise on their board. That is, they will look to appoint people who are business or product experts, but also people who are able to provide more general advice on the larger landscape in which the business operates.
Now let’s be frank. I’m not on the board LVMH because of my superior fashion sense. What I bring to the table is my experience working at the top of government and my knowledge of international markets and political systems. This is very important to big multinational companies these days: understanding the business environment in which the company has to operate. I certainly don’t advise on the length of a dress or the color of the year.
“You’re the interface between the company and the rest of the world.”
Take a very current example, the trade war between China and the USA. Companies want to know how it is going to impact the wider business environment.. Your insights will help them build a picture of what is currently happening, forecasts for the future, and how they need to adapt their business priorities to cope with the challenges.
FINDING YOUR PLACE
Remember, as a non-executive director, you’re not running the company or interfering in the management of the company. That’s the CEO’s job. Your role is to represent the shareholders and regulators by making sure that the company is observing rules and acting responsibly. This could be in questions of remuneration, incentive shares, incentive schemes and the general conduct of its business. This is very different from the expertise required to run a company.
I made the transition from government to business at the age of 48. That’s too late to become an executive director, as I didn’t have the 20 - 25 years of management expertise required to successfully prepare me for an executive role. However, I was able to translate my experience working in government to the responsibilities of a non-executive director of a company. Know what you can offer the company, and choose the right positions that will tap into your expertise.
Another thing you might be asked to do is to coach rising executives. I’m often asked to meet with four or five young managers, talk about my experience in government, and answer any questions they have.
EXPECT THE UNEXPECTED
Know that with various board appointments, you might need to learn skills on the go so as to be able to carry out your responsibilities. You’ll have to be open to and ideally enjoy learning new skills.
For instance, I had to learn a lot about accounting and balance sheets when I started out. Coming from a foreign affairs background, I had little experience of balance sheets. That kind of financial report had never come my way. My board position required me to take a crash course in financial literacy. I may not be the top class of financial experts out there, but I most certainly know my way around a balance sheet now.
Don’t be concerned if you’ve spent your career working in one sector, but the company whose board you’re on is in an unrelated sector. The reality is that most companies want experience from outside their own sector and independent judgment. A bank would look at banking executives for specialized expertise. What you have to offer is broader, fresh perspective and a new way of looking at challenges.
RESOURCES AND MINDSETS TO SUCCEED
I read several newspapers and periodicals online to keep up with the flow of information. If you’re already widely engaged across various boards, those are sources of information in themselves! My wife recently counted my declarations of interest in Parliament and found that I held 28 different positions – including non-profits, or as a trustee for think tanks or charities. Those are 28 different sources of information that come together and provide a rich bank of information.
In terms of mindset, you need to keep yourself alert and ready to embrace learning, even until the very last minute. It certainly isn’t everyone’s cup of tea. If you want to slow down and take a break from your already busy life, then taking on several board positions isn’t for you. However, if you want to remain engaged and keep your mind busy tackling the various challenges that these companies face, then go ahead and take it on. Make sure that you’re adding value and are able to commit to every additional position you hold.
STEPS TO TAKE IN 24 HOURS
1. Excel to Stand Out
If you’re already on the board of a company be ready to apply yourself fully, attend all meetings and offer some perspective. This way you’ll gain a reputation, and will likely be recommended to other companies who are recruiting directors.
2. Know What You Have to Offer
Write down a list of your top five skills that you could use to contribute to a board. Use this list to empower yourself to find new board positions outside of your background or area of expertise.
3. Stay Current
Make sure you’re reading extensively on the industries that are relevant to you, but also keep your eye on the global business climate. The depth and breadth of knowledge you accrue will help you contribute significantly to your various roles.