Although money is probably not one of them, outside board service promises CFOs rich rewards: broadened professional horizons, top-flight networking opportunities, and an enhanced résumé.
On the other hand, a company directorship is no longer the sinecure it once was. It requires serious effort from people whose day jobs already demand daunting amounts of time, energy, and dedication.
“CFOs interested in more senior positions need to improve their knowledge of the long-term issues that organizations face,” said Milan Moravec, chief executive of Moravec Global, a consultancy on board composition. “By joining a board, they are able to address the big-picture issues. But more important, they have the opportunity to learn from successful leaders and expand their network.”
Tom Kolder, president of Crist|Kolder Associates, a finance-executive recruiting firm that also cultivates candidates for board seats, agreed. He said board service “allows CFOs to engage with another group of senior business leaders and bring back to their organizations best practices. Often people make their decision on a board assignment based on who they’re going to hang out with.
“It gives you the ability to say you’re actually a full-time board member and not just jumping in and out of [internal board] committee meetings,” Kolder added. “The marketplace values that.”
The recent subprime mortgage meltdown has made many company directors focus on their fiduciary duties and thus heightened the interest in recruiting people with financial expertise for board seats. The idea of beefing up boards with that expertise is not new, however. Over the past several years, boards’ demand for finance experts has increased slowly but steadily, as has CFOs’ interest in serving on boards, according to Kolder. About one-third of some 20 candidates that Crist|Kolder successfully recruited for boards last year possessed financial backgrounds, he said.
The heavier workload that companies demand of their board members means that individuals typically serve on fewer boards than years ago, which in turn has contributed to the increased demand for board members of all kinds, according to Kolder.
“In the past, individuals might have sat on three to five boards,” he explained. “Now, it’s maybe one, two, or three boards. And as the ability to attract board candidates becomes more difficult, number-twos like CFOs become much more in demand.”
Although Kolder said that “the CFO today is seen as having broad-based business acumen,” Moravec contended that boards view many CFOs as “technocrats.” He urged CFOs seeking board positions to improve their interpersonal and leadership skills as well as gain some experience in other organizational areas such as operations, marketing, and human resources.
“Your strongest suit can become your Achilles heel if you don’t broaden yourself,” Moravec said.
For a CFO earning a large amount of money, joining a board won’t be a lifestyle-changing event. Directors earn from $50,000 to five figures annually, with an average of about $75,000, according to Kolder. Many board members are foregoing cash in favor of equity such as stock options, which could provide a hefty payday depending on a company’s fortunes, he said. But he added that “the financial element is not an overriding factor” in CFOs seeking outside board seats.