- The Challenges of the Reasonable Interpretation
It is important that we have term limits for board members so we can get fresh blood.
We need term limits; otherwise how do we get rid of poor board members?
These are two very common reasons for setting term limits for a board. You can add to this list of supposedly good ideas. In the meantime, let’s look more closely at these two reasons.
First it should be noted that a board member who is limited to two terms has a rookie term and then just one term in which to make significant contributions (in particular if a term is only two years).. Terms limits can result in excellent board members being “forced” to step off the board. As they leave they take their experience and history with them. That acquired knowledge and experience should be capitalized on and carried forward as an ongoing contribution to good governance. In all too many cases their seats are filled with less experienced, less effective and often less willing board members.
There is a need for new board members. They can bring a healthy naivety that raises questions which should be asked as well as additional perspectives that need- to be examined. In most cases, this will happen based on the natural attrition of incumbent board members who don’t let their names stand for re-election or appointment. If you have a board of nine members and each one stays for nine years (three 3-year terms), on average you will have a new board member every year. In reality, not all board members are likely to be able to serve nine years, so there will be more new board members. However, if many board members have been there for multiple years (we’ve seen 20 and 30) it would be wise to consider the need for fresh blood.
Long term board members have organizational history. They are aware of the context in which certain decisions were made. These board members aren’t tearing down fences, because they know why the fences were built in the first place. There is a team mentality that comes from working alongside other board members.
But how did we get rid of poor board members?
Good question. Should a board have term limits which result in getting rid of both competent and underachieving board members? Why not keep the contributors and release those who are underperforming or aren’t providing sufficient value? Having term limits which allow a board to passively offload its problems sounds ominously like an organization which places a higher value on not hurting anyone’s feelings than providing excellence in governance.
One way to address this problem proactively is to have processes in place where board members are regularly being evaluated. Issues such as attendance and punctuality can be easily monitored. Other more subjective matters can be considered. Are they prepared for meetings by having reviewed meeting materials, including monitoring reports, in advance? Do they actively participate in discussions in a way which adds value? Do they tacitly agree with almost everything, or on the other hand are they cantankerous? These ideas can be helpful, but they won’t always root out the problem board members. In those cases the board needs to have a process for suggesting that underperformers not let their name stand next time around. For all this to be meaningful requires the board have its mutually agreed upon expectations articulated in its Governance Process Polices.
In summary, whatever an organization decides to do relative to the setting of term limits, it needs to do in the best interests of the organization and more specifically in the best interests of excellence in governance.