When I began my board journey, I didn’t consider the importance of diversifying my board portfolio. A board portfolio is the different boards you lead and serve. Similar to your investment portfolio, you should be strategic in developing your board portfolio. It should reflect your risk profile and the stage of your board career. Additionally, you should regularly monitor and review your board portfolio to ensure you are getting a positive return.

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

  1. Consider the Evolution of Your Board Journey

To evaluate the evolution of your board journey, first, consider the size and stage of the boards you serve. For example, if you join the board of an emerging company, the director’s role is often a value-add role that is hands-on. As the company matures, your board expectation will evolve to more of an oversight role. To better understand your role and responsibilities as a board member refer to this guide called “Directors and Officers in Canada” a concise and informative resource. After reviewing core company law concepts— notably fiduciary duties, the duty of care, reasonable diligence and good faith reliance—this publication considers potential liabilities in tort and extra-contractual liability, as well as directors’ duties in areas such as employment law, environmental law and taxation.

Second, it is essential to understand consider the time commitment required for a board. Each board you serve on will go through different stages, including emerging, growth, transformation, downsizing and possibly restructuring. Each stage requires various time commitments.

Third, understand the different governance issues the company will face during your board tenure to add to your board experience. Some governance issues that you might encounter as a board member include CEO succession/development, M&A transaction, IPO, significant investments and disruptions in the industry.

Fourth, understand that your board service varies depending on the challenges/opportunities the company faces.

Finally, as your board journey matures, consider taking on board leadership roles. As you gain experience, you may consider stepping up in your board leadership roles as a Committee Chair. As a Chair, you learn to generate dialogue on the committee and facilitate informed decision-making. Both experiences are invaluable in advancing your skills as a board member 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:

First, have you thought about diversifying your board portfolio by joining boards that are in new industries or sectors? While these boards may present some level of risk, they may also offer an exciting opportunity to expand your skillset. For example, I joined the Canadian Medical cannabis company board; MedReleaf went public in 2017 and was acquired in 2018 by Aurora (TSX-ACB). I was considered for this board because of my financial, public company, retail/consumer and regulated industry expertise. For me, joining MedReleaf offered an opportunity to apply my learnings from other industries to the emerging cannabis sector.

Second, have you considered joining a new committee? In my case, I am usually 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 presents a learning opportunity. Your board governance experience and fresh perspectives may prove to be an asset to the committee. Branching out and joining a new committee can also open the doors to other opportunities. For example, a Special Committee (SC) comprised of independent board members is formed to address the company’s unique issues. The SC issues may include a CEO search, a significant transaction or a particular investigation. Such experiences provide unique and challenging opportunities to learn new skills that will improve your governance abilities.

Third, when is the last time you took risks or challenged yourself regarding your board portfolio?

Finally, are you ready 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 the trust and credibility of my 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 experiences.

  1. Other Issues to Consider When Diversifying Your Board Portfolio

The corporate calendar and the fiscal year-end are critical considerations when taking on new board opportunities. If you have several corporate boards you serve with a fiscal year-end of December 31st; you may experience conflicting demands regarding your time and schedule. As many of us know, fiscal year-end presents a demanding financial reporting period.

As you diversify your board portfolio, consider your board compensation. As a Corporate Director, your board compensation will vary depending on the size and stage of the company. Here is an excellent resource on board compensation: https://bit.ly/3h7NH32

The type of board compensation is a final consideration. Are you prepared to receive 100% equity based in the form of Deferred Share Units (DSUs), or would you prefer 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 essential to consider diversifying one’s board portfolio. Otherwise, why join a new board?