Life cycle of a board director


Directors can outlive their usefulness

Cycles and cycles within cycles.  Just as a product has a life cycle, a Director on a Corporate Board has a useful life cycle.  Sure, the sole or primary shareholder(s) of a private company will generally want to (and should) remain on the Board as long as he or she has an active interest on the company, but aside from that exception, just as soil needs to be tilled and turned over in the spring, the membership of the Board of a Corporation should be refreshed occasionally.    

Many (if not most) of us who have worked with a variety of Boards have witnessed Directors, who may be otherwise very smart and competent directors, but who have over-stayed their usefulness on that particular Board.  I see this very often in retired company executives who were asked to join the Board of their former company.  This can be a very good idea for the sake of retaining institutional knowledge and continuing current strategic initiatives.  However, it can also cause the Company to take less risk, to stagnate, since some longer-termed directors like the status quo and are reluctant to change company direction or strategy.  Often these directors are comfortable doing what they have always done and are reluctant to take chances.  Chairmen and shareholders of private companies should evaluate their directors and the overall composition of the Board regularly to see if the Board needs some fresh blood – fresh perspectives and the willingness to propose things counter to ‘the way its always been done.’

There is a great discussion about how to find great new Directors inThe Private Company Board of Directors Book. Click here for more information.