Leadership

Four Better Governance Questions Than "What's Your Board Size?"

By / Sep 15, 2014 (iStock/Thinkstock)

Is the secret to Apple’s success its small board size? Perhaps. But it takes more than numbers to make sure your governance runs like clockwork.

Everybody’s watching Apple again.

Forgive the pun, but it seems appropriate.  The company’s attention-getting announcement last week of its entry into the smartwatch business has relaunched a discussion about what it is that Apple is doing right. For a long time the answer to that question was simple—“Steve Jobs”—and Tim Cook’s leadership has been relatively unspectacular enough to perhaps prove that claim. But one splashy new device and half a billion U2 albums e-airdropped in people’s inboxes will change the conversation fast.

“If you get a good mix of people and backgrounds and perspectives on a board you can get a much healthier organizational leadership.”

One explanation the Wall Street Journal tested a few weeks ago: The secret sauce is Apple’s board size. “Apple directors move fast because there only are eight of them,” the Journal reported, adding that “smaller boards at large-cap companies like Apple and Netflix Inc. appear to be decisive, cohesive and hands-on. Such boards typically have informal meetings and few committees.” A related analysis suggests that large public corporations with 8-10 directors have outperformed those with 12-14 in the past three years.

If you’ve been in the association world for longer than five minutes, you’ve been on this ride. Big boards are full of dead weightExcept that is, unless big boards better distribute powerThough they do diminish your decisionmaking capabilities. Or is the real problem that they swallow up staff resources? And around and around.

Discussions about board size—at least those that narrowly focus on a magical, optimal board size—ultimately miss the point. I recently spoke with the CEO of a state medical society that has a 30-person board in addition to 100-plus-person house of delegates that raise policy issues that require the board’s attention. Could this structure be more efficient? Certainly. Does the size get in the way of being strategic? Indeed. But then, one or two prickly types on a 10-person board can do much the same thing.

So in the interest in shifting the conversation away from just talking about numbers, here are three proposed conversations you might have about board structure instead:

Is the CEO in control? Beth Gazley and Ashley Bowers, in their book What Makes High-Performing Boards, point to research that suggests effective boards don’t flow out of a particular size so much as a structure that emphasizes strategic goals. And the staff leader provides that emphasis. “CEOs acquire the experience to work with larger boards over time, but that managing large boards may pose a challenge for inexperienced CEOs,” they write.

How’s your vetting? The Wall Street Journal article pointed out that during its vetting process for a new Apple director, one candidate visited with each of the other directors. This happened quickly given the relatively few people required to meet, but the same process can happen quickly with a larger board; what matters is that he potential board member was scrutinized, and given the opportunity to scrutinize the group she would potentially be joining. This seems obvious, but not all associations pursue it: 77 percent of associations check a potential board member’s qualifications.

Where are you in terms of diversity? Associations have long lagged when it comes to including women and minorities in their ranks. But diversity is more than just making boards less white and male—it also involves making them more robust and willing to hash out a variety of ideas. John Gillespie, author of the book Money for Nothing, a critique of corporate boards, told me in 2010: “If you get a good mix of people and backgrounds and perspectives on a board you can get a much healthier organizational leadership as a result. The problem is that too many boards lack that kind of diversity because they’re self-selecting entities.”

What’s your strategy for strategy? What Makes High-Performing Boards does identify one particular board-size sweet spot. Boards of 16-20 members are “more likely than either larger or smaller boards to engage in high levels of strategic discussion at board meetings,” Gazley and Bowers write. But correlation isn’t causation, and boards both smaller and larger are capable of the same strategic discussions.

The board-size debate isn’t over, of course. What’s your take? Have you seen a relationship between board size and success? Share your experience in comments.

Mark Athitakis

Mark Athitakis, a contributing editor for Associations Now, has written on nonprofits, the arts, and leadership for a variety of publications. He is a coauthor of The Dumbest Moments in Business History and hopes you never qualify for the sequel. More »

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