There is always a discussion around whether the size of your board is appropriate for your business. Should it be bigger or smaller? Board size can depend on the nature of your business, how big or small your company is, and the impact of good governance on your business. While size is an important factor to consider, the composition of your board should also be revisited from time to time.
As we approach the beginning of Q2, now might be a good time to evaluate your board’s efficiency and analyze your board size and composition. Here are a few reasons why this evaluation matters:
Transparency
A smaller board can facilitate more room for collaboration between the board members and the company overall. However, it also means meetings may be more informal, leading to the possibility of overlooking certain crucial issues or taking things too lightly. This can lead to gaps in communication due to missing crucial information.
With bigger boards, there is a tendency for one or two board members to take the “lead” or “dominate” the group, leading to pitfalls in communication and possible problems within the board. However, bigger boards tend to hold more formal meetings with clearly set agendas, making it easier to maintain order.
Knowing these features of smaller and bigger boards can give you the scope to understand how transparent the communication is within your organization’s board.
Independence
The number of board members helps determine how autonomously you can run your organization. Board members are there to help advise on crucial elements of your business, such as finance, risk management, technological advancements, and key processes. As a business owner, you may need to decide how many board members you can work with effectively in order to independently have control and ownership over your business.
Diversity
It is easier for a larger board to be diverse. Even so, the important factor to remember is that diversity is not a checkmark to tick off but is actually a crucial element for your business. Whether a board is small or large, diversity brings different backgrounds, experiences, and perspectives to the table. This enables you to get an array of advice from board members with varied paths. Therefore, evaluating the composition of your board ensures you are bringing the most relevant experience and perspectives to your business.
Effectiveness
How effective is your board? Regardless of the size, understanding and evaluating its effectiveness helps you gather crucial information about your business, such as business processes, investments, maximization of ROI, business goal orientation, and more. In order to evaluate this aspect, it is important to identify the size of your business. If you are a small to medium-sized business, having a smaller board might prove to be more effective.
Alternatively, you may need a bigger board for investment opportunities, sponsorship, and funding reasons. Understanding the effectiveness of the board will help you deduce whether you need to scale up or down.
Talent Development
It can be helpful to periodically step back and evaluate your board’s skills, abilities, and experience. You may be looking to add a new business service or department or expand an arm of the business. This might necessitate bringing new talent with pertinent skills and expertise to the board group. On the other hand, you might have someone on the board who specializes in an area that has nothing to do with your business. Aligning your board members’ talents and experience to your business goals and objectives is crucial to your board’s development and overall company.
In summary, it is good practice to occasionally assess your board’s size and composition. It is important to outline your business goals and align them with the kind of board you want to govern your business. This will help you determine whether you need to grow your board or size down. Evaluating your board size and its members can help you gain independence and help your business achieve transparency and diversity, making it easier to collaborate with the board and the rest of your team.
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