The benefits of board membership extend far beyond prestige or compensation; they offer executives a chance to grow professionally, make meaningful contributions, and build valuable networks.
However, serving on a public company board is not as easy as it once was. Increased regulatory pressures, shareholder scrutiny, and the risk of litigation have elevated board members’ responsibilities.
Despite these challenges, many public companies continue to attract highly competent directors. Why is this so? Because the opportunities and rewards of board membership make it a compelling career move for many executives.
Seven Benefits of Board Membership
The benefits of board membership are as diverse as the professionals who seek them. From career advancement to personal fulfillment, board service offers executives opportunities to grow, contribute, and connect meaningfully.
In this section, we’ll explore seven compelling reasons why board membership remains an attractive goal for many leaders.
1. A way to segue into retirement.
As executives move into the last third of their careers, many start planning their retirement and what they will do to fill the time. If we had a dime for every executive who says, “Once I retire, I’d like to sit on a couple of boards,” our coffers would overflow.
With board memberships, a retired (or nearly retired) executive can have a place in the business world but on a more limited and structured basis. No analyst meetings, no customer presentations. Just three days a quarter, often in a nice location. As one executive said, “I don’t want to practice, but I still want to be in the game.”
2. Best practices.
Many executives in the prime of their careers want to be on a board so they can learn from other executives and see what works for a different company, industry, or culture. Susan R. Nowakowski, President and CEO of AMN Healthcare Services, says that a board position should allow executives an opportunity to be constantly challenged and grow professionally.
She adds that directors should “get involved in addressing the organization’s key strategic issues by joining, and perhaps even chairing, the board’s strategic planning committee because strategic acumen and leadership abilities are valued in the business world.”
3. Connect with other executives.
There are many executives who like being exposed to other executives—whether for business reasons or simple networking reasons. It is not uncommon to see some potential board candidates choose to join a board based on the perceived caliber and stature of the other board members.
Similarly, we have conducted searches where prospective candidates have commented that the board we were recruiting for was “not high wattage” enough for them.
4. Compensation.
Make no mistake: serving on a public company board can provide attractive compensation, leaving many professionals wondering, ‘How much do board members make?’
With roughly 20 work days a year, board members can earn substantial fees, often supplemented by stock options. While many companies award a portion of board fees in the form of stock options, the potential for stock appreciation can also be a strong incentive.
Top corporate board earner Shirley A. Jackson, who sits on six Fortune 500 boards, including FedEx, Marathon Oil, and IBM, took home more than $4 million in board compensation from 2008 to 2010.
5. Prestige.
Right or wrong, some executives see a board seat as one more rung in a successful career. We have met executives who don’t have the time or, truth be told, the attention to detail that a board requires, yet still, they believe they are missing something by not serving. It’s almost like the corporate version of “Keeping Up with the Jones.”
Listen carefully, for the stories are plentiful of board members ever so quietly being asked to leave for not attending board meetings or being unprepared.
6. Strategic career move.
Many executives believe that board service will provide greater visibility, making them more sought after for a higher position with another company. This seems especially true with non-CEOs. We know a former CFO of a utility company who landed a spot on a Fortune 50 consumer products board. Many years later, while being considered for the CEO position of his business, he beat out someone with much more experience because the board believed his knowledge as a board member for another company would make him more effective at managing their board. Along these lines, some companies choose their CEO from their existing Board members.
While most board members don’t join a company board hoping to be its CEO, it does happen. Betsy Burton, the former CEO of Supercuts, sat on the board of jewelry retailer Zale Corporation for three years before being selected as President and CEO. From July 2009 to October 2010, twelve Fortune 1000 companies selected their new permanent or interim CEO from their board ranks, up from only four the year before, and the trend is only growing.
Depending on their expertise, executives can pick from a list of executive board positions such as Chairperson, Treasurer, or strategic committee leadership roles, expanding their career opportunities through targeted board memberships.
7. Opportunity to serve.
Some executives don’t care about any of the above reasons but want to serve; they believe they have the wisdom and experience to add value to a particular organization. As Thomas M. Gorrie, a renowned international health policy adviser, said when he was selected to join The Robert Wood Johnson Foundation’s board of directors, “I am eager to lend my experience and passion…to help continue the foundation’s reputation for innovation and excellence and to play a role in helping achieve lasting change in health and health care.”
Executives drawn to service often find fulfillment in the responsibilities of a board member, which include providing governance, offering strategic oversight, and ensuring the organization’s long-term success.
Maximizing the Benefits of Board Membership: Your Next Professional Move
Board service offers a unique blend of professional growth, personal fulfillment, and career advancement opportunities. From leveraging your expertise in a strategic capacity to building meaningful connections with other leaders, serving on a board can be a pivotal step in your professional journey. Whether you’re nearing retirement, seeking a new challenge, or simply want to contribute your knowledge and passion to a worthy organization, the benefits of board membership are as diverse as the roles themselves.If you’re considering board service as your next professional move, The Alexander Group can help you navigate the process. With decades of experience in executive search and board placements, we specialize in matching exceptional leaders with organizations that align with their values and expertise. Contact us today to explore how we can support your transition to board service and help you find the perfect fit for your skills and ambitions.