Board Composition: what’s the right size Board of Directors?
Board Composition and Board Size. How many Directors should your Board have?
Nine. Seven. Nineteen.
Ok. It depends.
Here’s how to think about it:
The logic of Board Size and Composition
For most organizations, a Board size of three to four Directors is likely too small. A Governance Board’s role is to provide oversight of risk, strategy and CEO performance. Doing a good job means that board composition must include a range of Director expertise. Something that might not be possible if there are only three or four Directors.
It’s just as likely that a Board of more than nine Directors is starting to become too large. Even though more Directors means broader expertise – whether it be in governance, regional representation or a particular subject matter expertise – it also means greater challenges managing the Board. Simply meeting can be tougher – especially on short notice. Bigger Boards put greater requirement on better planning – and better leadership.
Are there bigger Boards of Directors? Sure. Large diverse organizations like banks frequently opt for larger Boards. However, when you see the Board sizes for some of well-known companies it’s obvious even large companies don’t need large Boards. Apple has eight Directors. Amazon 10. Google/Alphabet 11.
Board of Directors Composition: Say No to the Executive Committee
You know your Board is too big when you decide it’s time for an Executive Committee. Executive committees are every Board’s clue that they can’t run without devolving at least some Board responsibility to a smaller group. Which is kind of ironic. The bigger a Board gets, the more likely it is to put decision making in the hands of fewer people.
We are not fans of executive committees. For lots of Boards the Executive Committee dilutes the knowledge, insight and participation of all the Board’s Directors. Too often this happens without the Board realizing what has happened.
So, what’s the right number of members for your Board of Directors?
Think about it and the number may become obvious. It’s likely between five and eleven Directors.