What is Overboarding?
Overboarding refers to the practice of a
business leader or executive serving on an excessive number of
boards of directors. This phenomenon has raised concerns about the individual's ability to effectively fulfill their responsibilities on each board due to time constraints and potential conflicts of interest.
How is Overboarding Measured?
Most commonly, overboarding is measured by the number of board seats an individual holds. While there is no universal standard, many governance experts suggest that serving on more than three to five boards could be problematic. Various
regulatory bodies and institutional investors have their own guidelines to determine what constitutes overboarding.
Reduced Effectiveness: An overboarded executive may be spread too thin, leading to decreased effectiveness in their oversight and decision-making roles.
Conflicts of Interest: Serving on multiple boards can create situations where the interests of one company may conflict with those of another.
Reputation Damage: Overboarding can tarnish an executive's reputation, as it may appear that they are more interested in collecting board seats than contributing meaningfully.
Operational Risks: The companies themselves may suffer from inadequate governance, leading to poor strategic decisions and oversight.
Enhanced Focus: Board members can dedicate more time and energy to their responsibilities.
Improved Decision-Making: With fewer commitments, board members are likely to be more engaged and better prepared.
Greater Accountability: A manageable number of board seats ensures that members can be held accountable for their actions.
Stronger Governance: Effective oversight leads to better governance and, ultimately, improved company performance.
Conclusion
Overboarding is a significant concern in business leadership and corporate governance. By understanding its risks and implementing measures to prevent it, companies can ensure that their board members are effective, engaged, and capable of providing the strategic oversight necessary for long-term success.