Many I speak with tell me that they would love to sit on a board but that they would only consider a paid board role. Whilst I think all NEDs should be paid for their time and expertise, this is not alway possible. However, only considering a paid board role I equally think is a mistake. As such, I spend much of my time articulating the benefits of serving on a board – other than just being paid.
I am a strong advocate for board members being paid.
I think this is good business. Amongst other things, payments can often be used as a ‘stick’ to manage the performance of board members; by paying Directors you can often attract better quality NED applicants.
A recent review found that the average fee received by a Non-Executive Director was $41,000. When you do the sums, and taking into consideration in some cases: time each month for board meetings (4hrs+), subcommittee meetings (2hrs+), travel (2hrs), pre-reading & preparation (6hrs +) – I just spoke with a client who had board papers of 400 pages to read! – and attending extra-professional board activities, plus the inevitable emergency situation that consumes you for a week each year, the hourly rate for the vast majority of Non-Executive Directors is pretty poor. Based on the above assumptions, for 12 meetings a year, and taking into consideration all of the above, this works out to be about $200.00hr – and far less on many occasions.
I recognise that, for many, this is a significant amount of money and for many, this figure may feel significant or like a valuable ($$) use of their time. Furthermore, if you consider this payment in the light of the considerable legal and financial risks that Directors take (if you don’t know about them consider getting some Governance Training) it is a wonder anyone is willing to consider a paid or unpaid appointment. For this reason, many people, when approached to join a board (particularly an unpaid one), simply say “no, why would I want to?”
So why would anyone consider serving on a board?
Whilst the average fee can be attractive, for many, the reality is that even unpaid board roles offer significant and tangible benefits – these should not be ignored.
The benefits, as I see them, include:
- You gain a Non-Executive Director (NED) title: If not already sitting on a board, often an unpaid role will be your first step. By taking this sort of appointment, you get to call yourself a ‘Non-Executive Director’, a title that you can leverage into other more significant or paid boards, should you want them.
- Gain governance and strategic experience: Whether paid or unpaid, any board appointment improves your governance expertise. Unpaid board roles are not less demanding than paid roles and can offer a great learning opportunity. Further, this experience will serve you well in your executive role, allowing you to work with your own board better and making it easier to convince others of your strategic success – something critical to do when pushing for a promotion.
- Develop your network: Even small and unpaid boards often include significant NEDs as part of the board. Sitting around the table with these people is a terrific way to build your networks, which can be used both personally and professionally.
- Join the club: Only 5% of people have board appointments. By gaining one, paid or unpaid, you join this exclusive club. In doing so you have the legitimacy to both approach and speak with other NEDs – the leaders and influencers in their industry. These networks can lead to new business and new opportunities.
- You can get paid: Even unpaid board roles can earn you some income. I have sat on a number of unpaid boards and have always earned some income through either the relationships developed with other board members or through the organisation itself through consulting work. It happens surprisingly often.
- Future-proof your career: Paid or unpaid board appointments improve your career. Studies have shown that those who hold a NED appointment in addition to an executive role: earn more; are more promotable; have greater job security and are unemployed less. Further, sitting on a board can also help future-proof your career by preparing you for retirement, redundancy or a career change. Board appointments also help you work more effectively with your own board and facilitate new connections – useful for both business development and pleasure. A board appointment today, more than ever, should be part of your career plan.
I recognise that serving on a board is time-consuming and risky. However, I think that individuals gain a number of unique benefits for sitting on any board, regardless of whether they are paid or not. Indeed, as I reflect on my own relatively meagre board experience, I am reminded of how valuable the board work I do has been to my executive career. In fact, I can pinpoint this NED experience as being pivotal to my executive success.
Board Direction advertises over 3,500 board vacancies annually. Regardless of whether they are paid or unpaid roles each of them offers an opportunity to further your career and offer tangible benefits beyond the sitting fees.
About the Author
David Schwarz is CEO & Founder of Board Direction – Australia’s leading board advertising and non-executive career support firm. He has over a decade of experience of putting people on boards as an international headhunter and a non-executive recruiter and has interviewed over one thousand non-executives and placed hundreds into some of the most significant public, private and NFP roles in the world
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