Interlocking directorships: How multiple board roles shape governance

Nqobani Mzizi

The phenomenon of directors serving on multiple boards, known as interlocking directorships, is one of governance’s most enduring features. Celebrated for connecting organisations to wider networks and knowledge, interlocks are also criticised for perpetuating power imbalances and governance failures. In truth, they are neither good nor bad. Their value depends on how they are governed.

Boards face a central question: when do interlocks enrich governance, and when do they undermine it, if ever?

In an era where scrutiny of boards has never been higher, interlocking directorships raise questions about fairness, inclusivity and accountability. Shareholders, regulators and the public increasingly want to know not only who sits on boards, but how many other commitments they carry and what networks shape their judgement. This is no longer a niche governance debate; it goes to the heart of legitimacy.

Interlocks can bring tangible benefits. Directors exposed to multiple sectors often act as conduits for knowledge transfer. A board member who has sat through debates on cybersecurity at a financial institution may raise the alarm more quickly when similar risks appear on a retail or utility board.

Likewise, interlocks broaden access to networks, giving companies informal pathways to capital, partnerships or policy insights. Exposure to multiple industries sharpens oversight, helping directors spot trends earlier than peers in isolated contexts.

Yet these very features that make interlocks valuable: shared knowledge and overlapping networks, can also become liabilities when governance falters.

When the same individuals dominate boardrooms, groupthink thrives. Directors recycle familiar arguments and avoid challenging colleagues they meet across multiple tables. Conflicts of interest also loom large, particularly in overlapping sectors. A director might hesitate to press management on a competitive risk if it touches on another company wherethey hold a seat.

Power can become concentrated in a small club of individuals, limiting the entry of new voices and perspectives that are vital for diversity and transformation. Worse still, reputational contagion means that if a director is implicated in a failure on one board, the taint spreads to every other board on which they serve.

King IV warns against precisely these dangers. Its focus on independence, transparency and conflict management makes clear that interlocks must be actively governed. Yet in South Africa, director recycling across SOEs, public entities and corporates continues to fuel debate. Does this network effect deploy expertise where it is most needed, or does it entrench a closed circle at the expense of innovation and diversity?

The true character of interlocks emerges in practice, as shown by three cases where overlapping networks shaped governance outcomes in markedly different ways.

In the corporate world, Unilever offers a positive example of interlocks at work. Over the past two decades, several of its directors also served on non-profits, global sustainability councils and other multinational boards. This created a cross-pollination of ideas that helped Unilever embed sustainability into its governance agenda long before it became mainstream. The interlocks served as a governance multiplier, enabling directors to bring global best practice into the boardroom and align strategy with emerging ESG expectations. Far from creating conflict, the overlaps strengthened legitimacy and long-term competitiveness.

But interlocks are not always benign. The cautionary tale comes from Enron. Before its collapse, Enron’s board was populated by directors who sat on multiple other boards, including major financial institutions. The network effect here was corrosive. Overextension diluted attention, conflicts of interest dulled oversight, and reputational contagion magnified the fallout. The interlocks reinforced a culture of complacency and groupthink, leaving directors reluctant to challenge management’s increasingly risky practices. When Enron imploded, the damage radiated outward to the other companies linked through its directors. The case is a stark reminder that interlocks can spread governance failures as easily as they spread insights. If Enron exemplifies the corporate risks of unmanaged interlocks, the public sector faces even starker trade-offs.

In the public sector, the risks of interlocks often come into sharper relief. The practice of appointing the same individuals across multiple State-owned enterprise boards and public entities has long been debated. On the one hand, it is argued that drawing on a small pool of experienced directors ensures continuity and spreads hard-earned lessons from one entity to another. A director who has overseen a turnaround in one context can, in principle, transfer that insight into another struggling organisation.

Yet the drawbacks are significant. When the same names appear repeatedly, the talent pipeline narrows, and governance cultures can become stagnant. Instead of driving reform, overlapping appointments may replicate old mistakes across multiple boards. This fuels the perception that appointments reward loyalty over capability, multiplying poor practices and eroding trust in institutions. The balance, as always, lies in capacity and independence. Where directors bring genuine expertise, integrity and time, interlocks can enable valuable knowledge transfer. But when appointments are made without regard for these factors, the network effect of interlocks risks entrenching dysfunction rather than enabling renewal.

These three cases reveal a common truth: interlocking directorships amplify whatever governance culture they inhabit. In well-governed contexts, they can serve as powerful accelerators of learning, foresight and legitimacy. In poorly governed contexts, they magnify risks, blind spots and failures. Given this duality, boards cannot afford passivity.

How then should boards govern interlocks? The first step is recognising that the issue is not about numbers alone but about capacity, independence and disclosure. A diligent director may handle three boards; another may struggle with two if overcommitted. Boards should ask not only “how many seats?” but also “how much attention, independence and value does each seat bring?”

Disclosure is essential. Directors should openly declare all external commitments, and boards should assess whether these create conflicts or dilute attention. Renewal also matters. Healthy board rotation ensures that interlocks do not become ossified networks of influence but remain vehicles for fresh perspectives. Succession planning is equally important, ensuring that director pipelines are intentionally broadened to include new generations and more diverse candidates. Director education and evaluation can further strengthen the positive network effects while curbing the negative.

Ultimately, interlocking directorships reflect a broader governance truth: structure alone does not guarantee outcomes. It is culture, accountability and vigilance that determine whether interlocks add value or extract it.

So the questions for every board are these:

• Are interlocks on your board enriching deliberations or recycling familiar voices?
• Do you have the right balance between experienced directors and fresh, independent perspectives?
• Are potential conflicts from interlocks actively disclosed and managed?
• How are you ensuring that directors have the time, independence and capacity to serve effectively across multiple mandates?

Interlocking directorships are a reality of modern governance. They can be bridges of insightor channels of contagion. The responsibility lies with boards to govern them wisely, ensuringthat the network effect strengthens governance rather than weakens it.

* Nqobani Mzizi is a Professional Accountant (SA), Cert.Dir (IoDSA) and an Academic.

** The views expressed do not necessarily reflect the views of IOL or Independent Media.

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