January 31, 2021
By Lynn Nowicki Clarke
It’s an enormous compliment when a director’s term is renewed, especially when it’s renewed several times. But is too much of a good thing possible in a board setting? Can a director who has served more than a ____ years (you fill in the blank) still be an effective director?
The easiest answer is “it depends.” What is happening in the industry? What new challenge is the company facing? Any recent acquisitions? What about board composition with regard to functional expertise? How do boards ensure the information they’re using in decision-making incorporates cutting-edge information or the latest research? What about age limits? What if you have a 70-year-old director who has the curiosity and energy level of a 40-year-old?
For a price, consultants continually offer “expert” answers to the tenure question. The correct answer to the tenure question is that many years of experience is a double-edged sword.
On the sharp edge, experience typically enables a board member to quickly assess a situation and ask questions that lead to rapid and effective action plans. Most important, board member experience can help management avoid costly mistakes and missteps.
The other edge of the “experience sword” is that long tenure can create jaded or fading board members. “We tried that 10 years ago and it didn’t work.” “We know the CEO is not interested in addressing that market or closing that plant.” Extensive experience, similar to cataracts, can cloud directors’ vision. It can make board members less willing to try a new approach or even consider an alternative point of view. Worst case: too much experience can cause directors to miss or dismiss disruptive trends. Directors in 2007 on boards of retailers and newspapers come to mind.
Now, let’s talk about you. Ultimately, it’s your responsibility to decide if “it’s time to go.” You will or should know. Objectively assess how you feel about the board. Putting aside COVID constraints, ask yourself these questions:
Finally, the sixth and most important question: Are you intellectually challenged by the company, industry, and board? Being intellectually challenged is the primary reason I love serving on boards. Right now, each of the boards I’m on is incredibly challenging and lots of fun. Can you say the same? If not, perhaps it’s time for you to honestly assess your tenure.
Next up: How a board skills matrix can gracefully solve the tenure dilemma.
Lynn Nowicki Clarke is a regular contributor to NACD’s Private Company Directorship newsletter. She has served on more than 10 middle-market private company boards. She currently chairs the board of Nielsen-Massey Flavorings and is governance chair for Abarta Coca-Cola and Vollrath Manufacturing. She is also managing partner for The Feel Good Labs, a young company in test with CVS and Target.