Executive Advisory: First-time Directors Are More Likely To Be Actively Employed
Employment Status and Boards
In 2023, 69% of first-time directors at S&P 500 companies were actively employed. Among these first-time directors, the most common professional background was in finance, at 28%. This includes financial executives and CFOs, accounting executives, bankers and investors. Additionally, 43% of non first-time directors were also actively employed.
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Individuals who are actively employed bring current and relevant professional experience to the boardroom. Day-to-day involvement in operational, financial and strategic matters keeps them well-informed to contribute to boardroom discussions. Companies view actively employed candidates as dedicated and hardworking because they continue to hone their skills and boost professional development through their ongoing work experience. Such active employment also ensures one’s professional credibility and relevance within the industry. Companies seek candidates who are actively engaged and making contributions to their organizations.
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Financial expertise is highly relevant to all aspects of a company and its management. Important decision-making about budgeting, financial reporting, risk management and strategic investments requires financially informed opinions. Professionals with backgrounds in finance are therefore essential for effective governance. These individuals possess strong analytical skills well-suited to overseeing performance and long-term planning. Additionally, financial executives have experience building relationships with stakeholders, including investors, regulators and senior advisors, driving communication and organizational success.
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Although being actively employed means competing priorities and time commitments, such engagement maintains industry connections. The advantage of active employment is that it provides the opportunity to expand professional networks. These networks could include senior executives and board members who can provide valuable insights into the appointment process and potential board opportunities.