Q. What is a reasonable board size?

A. While there is no single “right” board size, the average board in Canada numbers 11, which is exactly what it has numbered for over 30 years. The change has been in “right-sizing”, the number of smaller (5 or fewer) and larger (over 25) boards dropping significantly.

The first criterion to consider in selecting the size of a board is what type of board the organization needs, or chooses to adopt. There are at least five broad types of boards, based on the degree to which the levers of governance (direction and control) are held or shared among the main parties potentially able to govern an organization:

•  Management theory boards are largely advisory in nature, providing the CEO (often the founder or entrepreneur) wise counsel when asked. We find these boards early in an organization's life cycle, and in privately held corporations. They average 3-5 board members, a tight, cohesive social group.

•  Stewardship theory boards support and assist the CEO and executive team in opening doors to new markets and providing needed expertise in certain areas (e.g. legal, marketing, international, accounting.) We find these boards most often in corporations with a controlling shareholder, family firms and joint ventures. Board size averages 5-9 people.

•  Agency theory boards act as independent intermediaries between the interests of the owners and those of management (agents), both of whom are expected generally to act in their own self-interest. Agency boards are charged with acting only in the best interests of the corporation itself (fiduciary duty.) We find these boards in more widely-held publicly-traded and larger, more complex, corporations. Board size averages 9-15 people, permitting at least three core board committees to be populated.

•  Democratic theory boards act in the interests of the owners or members of the corporation, essentially as their proxies and representatives. We find these boards most often in the public sector (Crown corporations) and co-operative sector. Board size is slightly larger than agency boards (average 12 vs. 11), to meet representational and balance requirements.

•  Stakeholder theory boards act in the interests of a diverse group of stakeholders, including the owners, lenders, employees and communities. We find these boards most often in the not-for-profit sector. Board size is large (15 and up), to ensure equitable representation of all the key stakeholder groups.

The first step in governance is for the board, in consultation with the owners and management, to determine which of these governance theories best “fits” their organization over the coming strategic planning horizon (typically the next 3-5 years.)

This decision will then guide every other decision in governance:

•  Which model of governance to adopt, if any?

•  Which committees should the board use?

•  How often should committees and the board meet?

•  For how long?

•  What then is a realistic expectation of time and effort required of individual directors, including preparation, orientation, education and meeting time?

Other criteria to consider in choosing the right size of board are:

•  Quorum and participation expectations: too small a board can run into trouble reaching quorum (legally required to operate) or generating sufficient participation and value-added deliberation.

•  Social cohesion and board unity (“collegiality”): too large a social group risks splintering and lack of cohesion and unity. A small number of voices come to dominate, factions and faction leaders emerge. It is almost inevitable that a sub-group or clique (e.g. Executive Committee) take on an unequal share of power and voice.

•  Critical mass: social science again helps us understand the effect of this concept on board or group size. There are “tipping points” where groups gain sufficient critical mass to effect change. One or even two women, or members of other diverse groups, fail to reach this critical mass, but three or four may.

•  Committees required and expectations of directors serving on committees: if each director is to serve on at least one, but no more than two, committees, board size ranges can be calculated by simple arithmetic.

•  Extra-board activities: one reason not-for-profit boards are larger is because directors are expected to participate in many other, non-core-governance activities, such as fund-raising, advocacy, community involvement, volunteer work, organizing or hosting events, etc.

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