What are the risks to your career, income, family and lifestyle when transitioning into a director role? How should a director prepare for and manage these risks?
1. Income
Many consider commencing their directorship(s) with a non/small fee-paying NFP while maintaining their executive role as a mechanism to commence their portfolio. Others may consider this after they have retired from the permanent workforce.
An ASX-listed directorship is highly prized, but requires skills, time and commitment to attain. Only then will a portfolio replace your executive income. Director fees may be tied to the company’s performance (bonuses, stock options). Ensure the organisation has a director remuneration policy. If not, assist in developing one that indexes director fees on the same level as it does staff salaries.
2. Career
Directors are accountable for strategic and cultural decisions and outcomes. Mistakes at this level can have significant consequences for the organisation and personal reputation. Any misstep can be more noticeable, potentially risking your long-term portfolio career. Mitigation is not easily identifiable, but acting ethically and in the best interests of the company goes a long way to being judged fairly for decisions made.
3. Portfolio preparation
Skill development: Invest in leadership, governance training, strategic thinking and financial literacy to handle the role.
Mentorship: Seek advice and guidance from seasoned professionals who have navigated similar transitions, to help avoid common pitfalls.
Support network: Cultivate relationships within and outside your current connections, to create a safety net if challenges arise.
4. Time availability
Being a director with a portfolio of organisations can be challenging for time management:
24/7 responsibility: Directors are often expected to handle difficult unplanned situations and crises, regardless of the hour, blurring boundaries between work, other commitments and personal life. Leverage technology to manage your schedule efficiently, streamline tasks and reduce time spent on low-priority activities. You need an effective company secretary and to set clear boundaries with your availability to boards/executives.
Travel: Some director roles require significant travel. Generally, this is expected and not compensated for, which can negatively impact personal time. Protect your non-value-add time — if no decisions are being made, conduct the meeting electronically.
Balancing other directorships: Board meetings are usually in the last two weeks of the month, which can become over-committed. Ensure there are rolling 12-month board calendars for all your boards, that papers are provided at least a week before each meeting, and consider utilising the first week of the month, in particular for NFPs.
5. Lifestyle adjustment
Long hours, high stress and frequent travel can negatively impact your physical and mental health.
Self-care: Prioritise self-care through exercise, mindfulness practices and a balanced diet.
Monitor burnout: Regularly check stress levels and recognise early burnout signs. Taking proactive measures can prevent long-term damage. If you’re doing too much, drop the most time- consuming activity in your portfolio.
Outsource personal tasks: Where possible, delegate personal responsibilities to free up time for relaxation and social activities.
Social isolation: With many board meetings conducted electronically, this can be a danger.
Mix business with pleasure: Take advantage of director travel requirements by taking a few days off around work trips to see new places and connect with people outside your normal circle.
6. Managing family impact
Involve your family: Communicate openly with them about the demands of the roles and work together to maintain a healthy balance.
Quality over quantity: Focus on spending quality time with them when you’re available.
Plan time off: Schedule time off in advance to recharge and maintain strong family connections. This may require adjustment of the board calendars or remote meetings as the legal obligations of a director remain, even when you’re on holiday.
James Beck GAICD is chair of Darwalla Group and a director of Golden Cockerel, Axsium Group and Tessera Wines, a lecturer on governance for GIA and Family Business Association, and a core AICD facilitator.
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