Tip #76 Should Boards Limit Board Member Terms?
In dealing with the issue of how long board members should be allowed to serve on the board, it is important to strive for a balance between retaining experienced board members while having a steady flow of new board members. To achieve this balance, board member terms and the number of allowable terms on the board should be enough for board members to learn the ropes, make positive contributions, and provide board governance continuity over time. On the other hand, they should not be so long that performance as individual board member declines or there are insufficient opportunities for a steady stream of new board members.
To achieve such a balance, it may be helpful to have a sense of how boards currently set the length of board terms and the number of allowable terms. According to BoardSource,
· The most common term length for non-profit boards is three years (73%) followed by two years (18%) with only 5% of boards choosing not to set a term length. Other options selected are four or more years (3%) and one year (2%). (Because of rounding, percentages do not add up to 100%)
· The most common maximum number of allowable terms for non-profit boards is two terms (46%) followed by three terms (24%) with 24% of boards choosing not to set a limit on allowable terms. Other options selected are four or more allowable terms (6%) and one allowable term (<1%). (Because of rounding, percentages do not add up to 100%)
These statistics are drawn from BoardSource. Leading With Intent 2021, p. 33.
Another relevant factor to consider is how large should a board be. A larger board may provide greater opportunities for achieving a steady flow of new board members. However, it is important that a board not be so large as to become somewhat unwieldy and to compromise effective group functioning and decision-making. John Carver, the developer of the Policy Governance® model, suggests that “the simple rule is to justify any number over seven.” (For additional considerations about board size, please check out Tips for Effective Boards #30: “How Large Should Your Board Be?” Just click on www.BoardsOnCourse.com/blog. For John Carver’s thoughts about board size, you may wish to check out Boards That Make a Difference, Third Edition, Jossey-Bass, 2006, p. 366.) For actual board size, the latest information I have is that non-profit boards average about 15 members, down from about 19 members in 1994 (BoardSource, Leading with Intent 2017, p 18 and Leading With Intent 2015, p. 9) while large corporate boards (S & P 1000) average about 10 members (Peter Browning and William Sparks, The Director’s Manual, Wiley, 2015, p. 70.)
So, should boards limit board member terms? I believe that boards should seriously consider such limits. It would seem that limiting term length and limiting the number of terms are effective means for ensuring that a board has the capacity to achieve a steady stream of new board members with their new ideas and fresh energy. The caution is that established limits not be so restrictive as to prevent a board from retaining a strong nucleus of highly experienced board members.
To learn more about the Policy Governance® model, please click https://www.BoardsOnCourse.com/policy-governance.
To check out any of the other Tips for Effective Boards, please click https://www.BoardsOnCourse.com/blog.