I began my board journey without the thought of diversifying my board portfolio. In saying “board portfolio”, I am referring to the various boards you lead and serve on. These boards collectively make up your board portfolio. Analogous to your investment portfolio, you want to be strategic in developing your board portfolio to accurately reflect your risk profile and the stage/age of your career. Just like your investment portfolio, you should monitor and review your board portfolio on a regular basis to ensure you are getting a return on your board portfolio.

When thinking of diversifying your board portfolio, here are three key areas for consideration:

  1. Consider the Evolution of Your Board Journey

In evaluating the evolution of your board journey, you may think about the size and stage of the boards you serve on. For example, if you join the board of an emerging company, the director’s role is often weighted to a value-add role and more hands-on. As the company matures, the role may become more weighted to an oversight role. To better understand your role on a board, please refer to my previous blog post here.

With that said, it is important to consider the time commitment required for each board you serve on. Each board you serve on will go through different stages as a company. These include: emerging, growth, transformation, downsizing and possibly restructuring. Each stage that a company goes through will require different time commitments, so it is critical to be aware of the amount of time you have for each board you serve on.

In being aware of the stages a company goes through, it is important to consider that each board you serve on will be faced with different governance issues during your tenure that will add to your board governance experience. Some governance issues that you might face as a board member include: CEO succession/development, M&A transaction, IPO, major investments, disruption in the industry.

Each stage a board cycles through may present a new or different pace at which they work, depending on what issues the company faces. As a colleague of mine, Tamara Paton, a serving Corporate Director states:  “Even the pace of change facing an organization can give us fresh insight into how organizations work, how to motivate and compensate executives, and how to anticipate disruption.”

As your board journey matures, consider taking on governance leadership roles. As you evolve in your governance experience, you may consider stepping up in leadership roles as a Chair of respective committees you serve on. As a Chair, you learn to: i) generate dialogue among your board colleagues, and ii) facilitate the committee to make informed decisions. Both experiences prove invaluable in advancing your skills as a member on a board and in diversifying your board experience.

  1. Consider Going Outside Your Comfort Zone

When looking to go outside of your comfort zone, ask yourself the following questions:

Have you thought about diversifying your board portfolio by joining boards that are in new industries or sectors? While joining a board in a new industry or sector may present some level of risk, it may also offer an exciting opportunity to expand your skillset. For example, I joined a Canadian Medical cannabis company board that recently went public (see: MedReleaf, TSX-LEAF: https://medreleaf.com). I was initially considered for this board because of my financial expertise, public company, retail/consumer and regulated industry experience. For me, joining MedReleaf offered an opportunity to take learnings from other industries and apply them to the newly emerging cannabis industry.

Have you considered joining a new committee?  I am typically asked to join an Audit Committee because of my financial expertise. However, sometimes it is valuable to venture outside your comfort zone and serve on a committee that will present a steep learning curve. You may bring different perspectives and new ways of looking at governance/business matters the board is facing and prove to be an asset to the committee. Branching out and joining a new committee may open the doors to other opportunities. For example, sometimes a Special Committee (SC), – comprised of independent board members is formed to address unique issues facing the company. The SC issues may include: CEO search, a significant transaction or a special investigation. Such experiences provide unique and challenging learning opportunities where you will learn new skills which you can apply to boards you are already serving on.

When is the last time you took risks or challenged yourself regarding your board portfolio?

When you join a new board or committee, you are provided the opportunity to meet new people outside of your current network. I have joined boards where I was the “outsider” to the existing board and had to “earn trust and credibility” of my board colleagues. It takes time and you need to show up, be prepared, listen and ask questions. While intimidating at first, expanding your network provides the opportunity to learn from others with different industry experience.

  1. Other Issues to Consider When Diversifying Your Board Portfolio

Of vital importance for consideration when taking on new board opportunities is the corporate calendar and the fiscal year-ends. If you have several corporate boards with a fiscal year-end of December 31st, you may experience conflicting demands in regards to your time and schedule. As many of us know, fiscal year-end presents a demanding financial reporting period.

Of final consideration when looking to diversify your board portfolio is board compensation. As a Corporate Director, your board compensation can vary depending on the size and stage of the company you are serving as a board member. There are some good references on board compensation that can be found here: “Canadian Spencer Stuart Board Index 2016 – Board Trends and Practices of Leading Canadian Companies”

When you are thinking about diversifying your board portfolio, the type of board compensation is a consideration. Are you prepared to receive 100% equity based in the form of Deferred Share Units (DSUs) or a mix of cash and equity?  Your board compensation may also depend on the committees you serve on and whether you chair the board or a committee.

As you consider new board opportunities, it is important to consider diversifying one’s board portfolio, otherwise why join a new board?