Canadian corporate directors say they are working an average of 304 hours a year in their part-time jobs, devoting more time to their boards than directors in the United States or Europe.
A survey of 120 directors by consulting firm Korn Ferry found directors reported working longer hours than in the past because of greater demands to keep pace with corporate issues and monitor risks. They reported averaging 304 hours of work for each board, including time spent outside the boardroom preparing for meetings, attending training, keeping abreast of industry trends or representing the company at outside events and meetings.
Many said they were surprised by the number of hours they had worked once they added it up during survey interviews.
“They suddenly realized, ‘I really am spending so much time on this board,’” said Vancouver-based board consultant Patrick O’Callaghan, who partnered on the study.
Peter Dey, a director on the board of Goldcorp Inc., said board work definitely requires more hours now than in past because boards better understand their roles and have been steadily “upgrading themselves.”
“The change has been evolutionary, but it’s very tangible,” he said. “The typical director these days does not count his or her hours, but worries about his or her company virtually every day.”
Korn Ferry senior partner John Jennings said the old rule of thumb that directors do three hours of work outside the boardroom for every hour of board meetings they attend has become more like 10 hours outside the boardroom when every activity – including committee work, site visits, training and attending functions – is included.
The reported workload for Canadian directors far exceeds numbers from similar surveys in the U.S. and Europe.
A 2013 survey of 1,019 U.S. corporate directors by the National Association of Corporate Directors found they reported working an average of 236 hours a year, a 24-per-cent increase from 190 hours in 2005.
European corporate directors reported working an average of 215 hours per year, a 39-per-cent increase from 155 hours in 2003, according to a 2013 Heidrick & Struggles survey.
Mr. O’Callaghan said the Canadian survey was done using detailed interviews with directors who were prompted to add in all board-related activities, so it may have captured a more complete look at director workload.
As well, he said Canadian boards typically split the role of chair and CEO, while U.S. boards often combine the roles, which creates time efficiencies on U.S. boards, especially for the chairs. He added some practices are more time-consuming in Canada, including the increasingly common trend for Canadians to attend all meetings of board committees as observers, even if they are not members of the committee.
“It’s unusual for directors to attend all committees in the U.S.,” he said.
However, corporate director David Beatty, who has served on 35 boards in Canada and the U.S. including the board of Alabama-based Walter Energy Inc., said he has not observed that Canadian directors work almost 30 per cent more hours than U.S. directors.
“I would have thought the other way, quite frankly – there’s so much litigation in the United States,” he said.
Mr. Beatty suggested some directors in the surveys may have estimated their time incorrectly because it is difficult to quickly calculate the workload when so much of it occurs outside the boardroom in preparation and reading.
Mr. Beatty says he believes the hours required to serve on a board have climbed by about 50 per cent since 2002, and are continuing to increase as directors focus more time on risk management.
“All larger companies are worried about risk and risk management, and also the huge new cyber-risk components,” he said.
Claude Lamoureux, a director on three corporate boards who served on the board of Swiss-Anglo mining company Xstrata PLC until its acquisition last year, estimates he averages between 200 and 250 hours a year for each board but believes his workload hasn’t significantly increased in recent years.
“I’ve been on two European boards, and to me it’s similar to Canada,” he said.
Directors responding to the Korn Ferry survey said they were satisfied with their pay levels despite reporting a growing workload. While the survey did not include data on their pay, a 2012 report by Korn Ferry found directors earned an average of $87,908 a year at Canada’s 300 largest companies, although rates varied widely depending on company size.
The Korn Ferry survey found board chairs reported working an average of 332 hours per year, while chairs of board committees said they averaged 319 hours a year.
Directors of major companies with over $5-billion in assets reported working the longest each year at 388 hours on average, while directors of small companies with less than $500-million in assets reported working 215 hours a year.Report Typo/Error