A recent EY poll found that the majority of directors of European financial services companies sit on multiple boards. Directors hold three board positions on average, with over a quarter holding at least four. These figures have raised concerns that many directors are “overboarded”. That is, they have committed themselves to too many board positions to be able to effectively carry out their duties.

The UK Corporate Governance Code does not specify a hard limit for how many board positions non-executive directors may have, stating only that individuals must “allocate sufficient time to the company to discharge their responsibilities.” However, for company executives, it does say that they should only take on one FTSE 100 directorship.

It’s important to consider the wording of the code because the true consideration is not overboarding, but rather overcommitment – and there are plenty of other commitments that could prevent a director from properly fulfilling their duties outside of sitting on boards.

A growing remit

It is also important to bear in mind that the nature of the commitment of being a director is always shifting. The responsibility that comes with the role has steadily expanded over recent years.

Where the position once only required directors to keep their fiduciary duty to promote the success of the company, now as a result of the rise of corporate social responsibility and subsequently ESG, directors have additional duties to keep. this reflects the shift from shareholder to stakeholder capitalism, putting responsibility for wider societal concerns on matters such as the environment and social justice on the shoulders of directors. As these demands increase, so does the level of commitment needed.

This may explain why the Corporate Governance Institute’s survey of non-executive directors found that 60% said the role has become more demanding, mostly due to increases in regulation and needing to spend more time in board meetings.

However, this broadening remit for directors also makes it more difficult to assess their ability to meet time commitments. The onus is on companies to estimate how many days directors need to commit and to confirm that they are able to keep to them. So, it is important that companies monitor developments that could increase directors’ responsibilities or workloads, such as new regulations, and revise their time estimates upwards accordingly.

The limitations of limits

Many institutional investors have policies in place that determine whether they consider someone to be overboarded. These tend to be about three or four board seats, unless the candidate is a public company executive or CEO, in which case the restrictions are tighter, given the demands of their executive leadership role. If a candidate exceeds this number, the investor will automatically vote against their appointment.

However, these policies may not be as effective as investors would like them to be. They may provide a necessary check on a director’s ability to commit the appropriate amount of time to the role, but not a sufficient one.

Their biggest limitation is that these assessments generally do not include directorships of private companies or charitable organisations, which can place similar demands on time. On the other hand, it is difficult to factor in every time consideration as a matter of policy – making hard caps only suitable as a protection of last resort.

Even as a protection of last resort, placing hard caps on board seats may be counterproductive. Setting a numerical limit on the number of board seats a person may have can create a sense that anything within that limit is acceptable.

In practice, the capped figure, which should be a ceiling at the upper bound, for many inevitably becomes a target to be hit. Some people may have enough available time and skill to manage sitting on four boards, but most probably do not.

Proper assessment is key

Given the limitations of using a hard cap on board seats to determine if a director is able to commit the necessary amount of time, the UK Governance Code probably takes the right approach in avoiding being prescriptive. The key then is for companies to find ways to properly assess—both during the appointment process and on a continual basis after onboarding—that directors are able to keep their commitment.

As part of this, companies should estimate how much time they reasonably expect a director to need to be able to commit to and confirm with them that they can do so as part of the recruitment process. It is up to the company to investigate what other time constraints a director has, and this can be facilitated post appointment through gathering Directors’ Interests data.

Different companies will require different levels of commitment based on their requirements and board makeup, so regulators cannot dictate a set amount of time. There should also be an annual discussion on time commitments as part of the board evaluation to ensure that their capacity is being monitored, alongside the annual review of Directors’ Interests.

Ultimately, the chair manages the board and they should have one-to-one conversations with each director to understand their availability. They should be tracking attendance at board meetings and monitoring their flexibility to attend other meetings and contribute outside of the scheduled board meetings.

The duty to manage the board applies to the broader role of directors in supporting the organisation, not just within board meetings. This should all be factored into annual board effectiveness reviews.

In other words, it is the responsibility of the chair to manage the members of the board and ensure that directors are able to maintain their duties. It falls to the chair to act as the safeguard against overcommitment, of which overboarding is a factor.

Of course, it is also incumbent on the directors themselves to ensure they have sufficient capacity to effectively discharge their duty to the board, the company and other stakeholders.

Zoe Bucknell is CEO and co-founder of global SaaS provider Kuberno.