A recent report by the accounting and professional services group EY recently revealed how a third of directors at big British financial services companies now sit on the boards of at least four businesses.
Holding multiple jobs was most common in banking, where 65 percent of directors sat on more than two boards, according to the EY survey, which looked at 19 big UK financial services companies and 208 board members.
That compared with 40 per cent in insurance and 39 per cent in asset management.
The finding is likely to fuel concerns that senior figures in the City Mile are stretching themselves too thinly. And they’ve given rise to the term “overboarding”, which is an increasingly common corporate governance complaint among investors.
It’s easy to see why directors who sit on multiple boards could quickly become unable to oversee companies properly because they have too many commitments.
Financial services firms in the UK are operating in an increasingly complex external operating environment and are focused on building highly skilled, relevant and resilient board-rooms.
So although there are many valid reasons for board members to hold more than one position, a careful balance must be struck.
In terms of the benefits of having multiple roles a director can bring lots of different skills, experience, and expertise.
Getting it right leaves others to focus on where they can add maximum value without “bottlenecking” or limiting growth.
Plate spinning directors can also quickly build in bandwidth to fellow executives – allowing them to work on the business not in the business.
It can also help allow entrepreneurial leaders to drive transformation, change, innovation and growth rather than spend time, resources and energy on things that are not their main strength – like processes, procedure and the ‘day to day’.
But there are risks too. You must be careful not to build a top heavy business – and remember senior people come with senior salaries Often, directors brought on board don’t have clearly enough set KPI’s and expectations. Everyone should be adding value from the bottom up.
It’s also important to remember that the more senior people you carry – the more likely politics and personal agendas can creep in. Don’t let it happen.
Matthew Hayes is entrepreneur and growth consultant the MD of Champions UK plc