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Board Time Commitment
In earlier times, most companies had quarterly board meetings. Today, many rapidly growing companies have monthly board meetings.
Growth rate and meeting frequency
Large, and old economy, companies often grow at 5 to 10% per year. An early stage tech company can easily grow ten times faster. This increased growth rate means the company is also changing faster.
If a company growing at 5 to 10% per year can be effectively governed with quarterly meetings, a company growing at 100% per year probably needs at least monthly board meetings to achieve the same level of governance.
It's a lot more than board meetings
When retreats, travel, reading, meeting prep time, transactions, ad-hoc and committee meetings are also factored in, a director's total time commitment can be up to ten times the time spent in formal board meetings.
This can quickly become the equivalent of two to three days per month for a good director of a rapidly growing company.
Double the time for lead directors or Chairs
The job of a 'lead director' or 'Chair' can easily be double that of a regular director, depending on how much they are mentoring the CEO and working with other directors.
The administration of the board is also a significant time commitment. Depending on the company, this job can be done by the the company secretary, CFO, CEO, Chair or a combination.
Chairman job becoming full-time
Bill Dimma, in his outstanding book: Tougher Boards for Tougher Times – Corporate Governance in the Post-Enron Era argues that the job of a non-executive board chairman is becoming full-time.
He says: "To acquire and maintain in a fast moving world this level of knowledge is extraordinarily time-consuming. Thus the need for a full-time (or close to it) non-executive chairman.”
Dimma goes on to acknowledge: "I recognize that the concept of a full-time (or nearly) board chairman is anything but universally accepted. But the corporate disasters of the past several years may require new, tougher measures to help avoid unacceptable repetitions."
Just a few boards becomes a full time job
This time commitment means that an individual who also has a full time job can probably only do justice to one, or possibly two, high growth company boards.
A person whose primary job is to sit on boards, like a fund manager or professional director, might be able to be effective on four to six high growth company boards (depending on their other responsibilities and how enthusiastic they are about doing their email and expense reports on the weekends.)
If this does not seem intuitively satisfying, ask some greybeard angel investors or venture capitalists how many boards it's possible to sit on, or Chair. The answers will be surprisingly consistent. They will tell you that four to six boards is close to a full time job.
Two or three Chair roles will keep most people extremely busy, even if they don't have any other work to do.
This time commitment means it's now much harder to recruit good boards and that companies must be fair in compensating directors.
