As you climb the corporate ladder and establish yourself as a leading voice in your industry, it's natural to wonder: what's the next big move? Whether you're pondering your options post-retirement or seeking new ways to stand out, stepping into the world of advisory boards or board of directors might just be the answer. These exclusive invitations are prestigious milestones, but understanding the nuances between the two is key.
An advisory board consists of an established group of experts who can offer advice to organizations. Unlike a board of directors, an advisory board has no specific legal or fiduciary responsibility. The role of an advisory board is to offer strategic advice to help solve a wide range of problems. Typically, advisory boards generally meet on a semi-regular basis several times per year. Joining an advisory board is a great way to become more involved in the inner workings of your company.
Joining a board of directors is a bit more involved both time-wise and responsibility-wise. This group of individuals are legally responsible for governance, control, direction and management of an organization. In addition, board members have the right to vote and the power to make change within an organization. Board members are elected by business shareholders (this is not a position you can just volunteer for), and they are accountable for the performance of the organization. Board members also need to be extremely familiar with the goals and objectives of the organization, as the board meets regularly (expect at least 7-9 virtual or in-person meetings per year). This is not a position to be taken lightly, and also requires a large time commitment.
Joining an advisory board is the first step that you can take to eventually becoming a board member. By joining an advisory board, you will be in the company of other senior executives and you will also get inside exposure to the company’s operations. Additionally, this is a great way to network and to meet other people that might potentially help advance your career.
This is a very common question: yes, you are compensated for being part of a board. Being a board member can be a lucrative side gig or a second career for retired high-profile executives. According to Lodestone Global’s most recent report, median total compensation was $50,400 up +2.4% from the $49,200 reported last year (+9.7% growth last year). Additionally, financial services firms saw the most growth this year, paying their directors +6% more year-on-year. For those who are strapped for time, it’s important to keep in mind that board member time commitment has increased to about 65 direct hours/year and around 200 hours/year in total. The silver lining is that over 60% of companies are doing a mix of virtual and in-person meetings.
On top of a full-time job and other commitments, joining a board of directors might sound daunting. Boards have an extreme impact on company performance. Since creating a board of directors, 97% of companies reported increased revenues and 93% reported increased EBITDA. Since the respondent joined the board, companies reported an average revenue increase of ~65%. 69% of the participants categorized their boards as “Indispensable” or “Very Effective” at driving corporate strategy.
The road to gender parity on corporate boards has been a long and windy road. According to a pew research study, 58% percent of people say women have to do more to prove their worth than their male counterparts is a major factor in why there aren’t more women involved at the board level. 50% percent said that gender discrimination is a major factor, and 48% believe that it’s harder for women to become part of a corporate board due to family obligations. While we are far from equal representation, there might be light at the end of the tunnel: Lodestone Global’s most recent report revealed that 98% of boards with at least one female director reported an increase in revenues since the respondent joined the board. Women served on 85% of the boards of companies surveyed, up from 80% last year.
