The board's governance committee should take note of an
interesting new consulting firm research paper that
provides observations on the important concern of
"overcommitted" board members.
The paper, prepared by Equilar, examines the key question of whether experience and industry knowledge gained from serving on multiple boards is overshadowed by excessive time commitments of a director. Data suggests that the experience gained from multiple board seats can be particularly helpful in industries that have "steep learning curves" for new directors. On the other hand, industries in transition (such as health care) are seeking increased time commitment from their board members, who are facing increased expectations of their oversight obligations. In those situations, there is greater internal intolerance for directors who serve on multiple boards.
Concerns with "overboarding" and "overcommitment" have their roots in Sarbanes-era governance guidelines. Yet there is no "best practice" or "magic number" when it comes to determining the proper number of outside boards on which a director should serve. Assuring the focus, engagement and commitment of individual board members should be a key goal of the board's governance committee. This, given the transformation of the health care sector and the dramatically expanded agenda of the health care company board. The Equilar analysis, and similar reports, are useful resources for governance committee conversations on this increasingly important issue.
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