Working Directors

As companies remake their boards to address the new realities of business and work, a subtle but important trend is emerging: More directors are being appointed while they’re still in the workforce, rather than after retirement.

New data shows that 52% of new directors appointed to S&P boards this year are actively employed, versus 48% who are retired. A decade ago, those figures were reversed. And while the numbers have fluctuated—the split was 50/50 in 2023—the trend has been consistent for the last few years. In 2019, actively employed directors outnumbered retired ones 54% to 44%, for instance. 

Charles Elson, founding director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, says the shift reflects massive underlying changes that will only accelerate in the years to come. “Executives who have been retired for even a few years have not been exposed to a lot of the issues businesses now confront,” he says. AI, he notes, is the obvious example, but far from the only one. The need for specialized expertise in rapidly morphing fields like cybersecurity, finance, supply-chain management, marketing, and people management means boards need directors with real-time insights and experience. As a result, companies are seeking directors in the C-suite beyond CEOs and CFOs. “The deeper you go into the C-suite, the more likely people are to still be employed,” says Elson. 

In addition to functional expertise, several other macro trends are increasingly leading boards to recruit actively working directors. Jane Edison Stevenson, global vice chair of Korn Ferry’s Board and CEO Succession practice, says the shift toward working directors is being driven by efforts to increase appointments of underrepresented groups, younger voices, and directors with “future-forward” skills. To be sure, data shows that first-time directors are twice as likely to be employed than retired. “Boards are prioritizing recency and relevancy,” says Edison Stevenson. 

But a “working” director may carry some red flags.  The most obvious, says Edison Stevenson, is whether they will be available when the board needs them. Time commitments for board directors have increased exponentially—at last count, to around 320 hours per year. For his part, Elson says actively employed directors may be able to share only limited information, given their own jobs. “You can’t run your company and someone else’s at the same time,” he says. To be sure, regulators cap the number of boards working executives can serve on. 

That said, while active employment can be an asset for a prospective board member, being retired isn’t necessarily a disadvantage. Experts say—and the data shows—that retired executives can bring needed and valuable expertise and insight to boards. Joe Griesedieck, vice chairman and managing director of Korn Ferry’s Board and CEO Services practice, says boards shouldn’t underestimate the importance of having directors who have been through events like hostile takeovers, recessions, business-model transformations, activist battles, or even bankruptcies or regulatory fights. “Boards still want people who have been through all that, too,” he says. 

Learn more about Korn Ferry’s Board Succession capabilities.