A question that many boards ponder is in relation to how long should an individual remain on a board and this same question relates to the Chairman as well. Given that there is not a supply issues (and this is generally the case in the “bush”, and therefore places another layer of complexity over the decision-making process), there are some generally accepted principles that can be followed by any organisation that is lead by a board or committee of some sort.
Firstly, the Chairman – as the leader of the board and ultimately the organisation, the chairman must have the required knowledge, skills, commitment and understanding of the business to undertake this role. Given board members have these characteristics, each such individual should be given the opportunity to lead the organisation during his/her tenure. A maximum of 3 years is preferable to enable sufficient time to “learn the job” and then time to lead and deliver the outcomes that come from astute chairmanship. Any longer than this and complacency can set in, which is not a good outcome for any stakeholder. A board should have this discussion on an annual basis and develop a succession plan that manages this process.
In relation to board members, 3 terms are recommended as an ideal term of tenure. The 1st to learn about the role, the organisation and the industry/sector, the 2nd to take some leadership role and the 3rd to mentor/support new board members. Having an orderly succession plan is the preferred approach, as no organisation should be confronted with the option of turning over all its members in one year (unlike local government where all councillors could be ‘ thrown out’ in one year, which is a really poor governance outcome). An organised board renewal program generates the best result for all stakeholders.
Of course, it’s back to the planning board if there are no suitable candidates for either the Chair or board roles, however, necessity really does become the mother of invention in these circumstances.
Mark Schultz