Can you serve on a board as a retiree? That’s definitely a yes!
However, you have a better chance if you had board experience before retirement. You are also likely to land a seat on a board if you were a CFO or CEO during your career.
But before you choose a board to serve on, consider the differences in the types of organizations.
Differences Between Private, Public, and Nonprofits
One of the most obvious differences you’ll easily notice when eyeing a board seat is the size of the organization.
Although money is not usually the focus for most retirees looking to serve on boards, it is important to keep in mind that smaller organizations are not likely to offer compensations in monetary terms.
Cash payments are often a feature in large organizations, and these are mostly public corporations. Besides size, the difficulty level of landing a seat is another huge difference among the various organizations.
Landing a board seat on a nonprofit organization is usually easy. You need to demonstrate a passion for the nonprofit’s mission through contributions and you might get a chance to serve on the board.
On the other side of the spectrum, getting on board in a public organization can be quite difficult, especially for large public corporations.
Private company board membership isn’t as difficult as most public organizations but can be tougher to land than nonprofits.
Skills Needed To Serve On a Board
Serving on a board requires having certain skills.
However, these are not a mere catalog of skills commonly found on resumes for job applications. Instead, individuals hoping to serve on a board must have what is known as boardroom capital.
Specific skills may be required in certain organizations and this can vary depending on whether they are public, private, or nonprofit.
In general, though, retirees who are ready to serve on a board should have the following skills:
Knowledge and Passion
First, you must have sound knowledge of the organization where you are hoping to serve.
You must understand the structure, policies, goals, mission, values, and culture of the organization. Also, passion is a must, especially if you want to land a seat on a nonprofit board.
Passion for the mission of the nonprofit will show up in attending fundraisers, doing volunteer work, and generally standing in the networks and community of the nonprofit.
Retirees who want to serve on a board must demonstrate an ability to inspire, empower, and mentor others, especially aspiring leaders.
The individual should also be able to strategically use resources to achieve organizational goals in addition to delegating responsibilities.
Thankfully, all of these leadership skills are usually not strange for a retiree who has worked all his or her life in top management positions.
Board members must be able to speak professionally in both large and small groups. They must possess the ability to facilitate discussions in groups and strategically guide others to work toward realistic consensus.
As a board member, you should be able to read, understand, and analyze financial reports, even if your primary field during your working years wasn’t specifically in the finance area.
Talking in numbers is a skill all board members should possess because they are expected to analyze and review proposed budgets to suit the organization’s priorities and set goals.
Strategic Thinking and Decision Making Skills
Strategic thinking can mean a lot of things, including:
The ability to think critically and independently, challenging and questioning information when necessary.
Ability to take appropriate actions after making efficient and informed decisions.
Fusing and incorporating diverse viewpoints.
Quickly processing information while considering the big picture.
Ability to analyze and provide feedback on reports of several other groups, such as task forces, standing committees, etc.
Ability to Function Independently and as a part of a Team
Board members must be able to, yet
Serving on a board means interacting with others in a group setting, contributing positively to ideas, as well as valuing the contribution of others.
This means members must have the ability to effectively collaborate with other members and provide useful and timely feedback to the board. Yet, each board member should also be able to think on their feet and work independently.
Benefits of Serving on a Board
Volunteering on a board can be fulfilling but it also comes with some perks. Some of these benefits include:
Create real impact: You may have been small potatoes in the grand scheme of things during your working years. But serving as on a board gives you the chance to make a real difference and create a positive impact on a company. This is hugely rewarding!
Learn more about other businesses: You get to learn the ins and outs of a business from a closer perspective when you are on a board. This broadens your horizon and helps you gain a deeper understanding that you can apply to your own business or company.
Building an enviable network: Securing a seat on a board connects you to a group of highly talented individuals with a wealth of experience. You can take advantage of this to establish and build a strong network of professionals. Besides learning concrete lessons from these executives and leaders, you can also get connected to their own contacts and expand your network for bigger opportunities.
Do You Get Paid Serving on a Board?
One aspect of “benefits” to consider is monetary compensation.
Board members give their time and make contributions that help steers an organization toward its set goals. But do they get paid?
The answer to this depends on a few factors, including the following:
Type of organization: Most nonprofits usually don’t pay their board members, at least in monetary terms. Only a few nonprofit organizations pay actual salaries and these are typically very large organizations, such as hospitals. On the other hand, for-profit organizations offer some form of salary or monetary compensation to board members. But the exact amount of money can vary between for-profit organizations.
Private or public organization: Cash retainers and meeting fees are more commonly offered to board members serving in private organizations. Public organizations may compensate board members with equity in addition to salaries or retainer fees.
Size of the organization: It is common for large organizations and multi-million-dollar companies to offer cash compensation to board members. That’s because they already earn enough money. However, board members in startups and smaller companies are likely to get equity in the form of shares or stock options as compensation. If things work out well, and the company has significant growth, the holders would have had large payouts.
Number of meetings held: In some cases, some organizations will compensate board members based on meeting attendance. This means their pay will depend on how many meetings are held.
In general, where monetary compensations are paid, board members can expect an average salary of $38,818 per year. This salary is not based on an hourly rate. Instead, it is a retainer fee for their invaluable services.
Whether or not board members get a retainer, they are likely to receive other compensation options, such as:
Reimbursements: Board members often have to travel for meetings and official retreats. It is common for the organization to reimburse them for hotel reservations or lodging, airfare, and other expenses.
Stock grants: Board members may also receive some number of shares of the organization’s stock for free. This is known as stock grants and it may be offered at set timeframes. For example, the organization may provide stock grants to board members after every two years. Board members that leave the board before the predetermined time will lose their company stock.
Stock options: Some companies may also offer stock options as a way to compensate board members. This differs from stock grants in the sense that it is not free. Instead, it allows the board members to buy and sell a specific number of shares in the company’s stocks at a price difference from the market value.
Meeting fees: It is not uncommon for some organizations to pay members for attending board meetings in addition to a retainer fee.
Liability insurance: While board members typically comply with relevant regulations in making companywide decisions, you can never rule out allegations of wrongdoing or improper actions.
For this reason, some organizations provide liability insurance to board members in addition to other compensations.
This is to protect them from lawsuits that may arise from decisions made in the best interest of the organization and stakeholders.
Retirement frees up your time and allows you to follow your passion.
If serving on a board is your dream, start by figuring out the type of board you prefer and one that suits your professional skills. Do your due diligence while you build a professional network that can help you gain a board position.
When you get an opening, be sure to demonstrate how your skills and experience can add value to an organization.
John E Chambers is an experienced financial advice expert. Born in Chicago, he has a master's in Industrial Finance, but he has spent decades offering investment advice to businesses and individuals alike. He is the founder of RetireeWorkforce.com and wants the website to be valuable for retirement advice. In addition, he writes articles that help users jump-start their retirement plans and choose the best investment options. If not pondering over stock market statistics or reading some magazines, you can find John spending time with his family. As an early retiree, John also offers unique insights into what post-retirement life is like.