Stability vs. Stagnation: The Board Structures that Make the Difference

If you’ve spent time in the nonprofit sector reviewing organization’s board rosters, you’ll see plenty where it’s clear the organization has had the same leadership for decades. Often, these organizations have a reputation amongst funders and their peers for being entrenched in a way of operating, limiting their possibilities for success.

These same boards have conversations about the need for new members, but many fear losing institutional knowledge. And some members experienced serving on boards of organizations where, for a variety of reasons, there was significant turnover and it feels like the board is operating without adequate context, which increases boards’ reluctance to limit terms.

These fears are not unfounded, but boards cannot let these scenarios drive decision making. Instead, they can take thoughtful measures to foster stability and innovation.

Term limits and staggered terms are simple, structural measures organizations can adopt to balance institutional knowledge with gaining new perspectives. In conjunction with a commitment to consistently building a pipeline for board succession, they are important tools to prevent leadership stagnation.

Term Limits

Institutional knowledge is deeply important. It helps leaders understand how decisions were made, what an organization has tried in the past, and steeps them in its culture and values. However, the other side of the coin is the potential for stagnation. The board can be too entrenched in the same ways of working and thinking that guided the organization for decades. Furthermore, there are other effective ways to capture and transmit institutional knowledge including documentation, integrating it into the onboarding of new board members, and having periodic contact between new board members and former board members (plus, keeping former board members engaged has multiple other benefits).

Before discussing term limits, simply being clear on the length of a term can be helpful. While many bylaws are clear about term length, some are not. If a term ends after two or three years, for the board member, it’s a way to gracefully allow them to consider their work on the board and whether they want to continue (assuming they haven’t reached their limit).  In an organization that is consistently cultivating a board pipeline, the board term in conjunction with a limit to how many terms a member can serve, allows a director to step down without feeling they are leaving an organization in the lurch. Even if they haven’t reached their term limit, the end of their current term is a moment to consider the possibility that service might no longer be the best thing for them personally and/or for the organization.

Clear terms also allow a board’s Governance/Nominating Committee to have a conversation with a director who is not performing or who seems disengaged. While Governance/Nominating Committees should attend to this periodically, it is helpful to have a deadline to discuss as it as part of the rhythm of board service.

When discussing potential term limits boards often ask, how will we manage if a member hits a term limit and we can’t find someone else to serve, or what if we really need a director’s specific skills? First, I’d question whether that is the case or just feels like the case. Second, I’d recommend reviewing how your board builds its recruitment pipeline. Having board members serve for long periods of time is papering over the larger issue – the recruitment pipeline is not working. I’ll address setting up a good pipeline shortly, but I do want to acknowledge that even with a well-functioning pipeline things go awry and there can be a gap in recruitment. To address those situations, I’ve seen several examples of bylaws that allow for an extension to a term beyond the set limit with a majority or super majority vote of board members. There’s also the option of asking a director who is term limited to engage in a different form of service including committee or task force service (if the bylaws allow a non-board member). Another structural option is to limit consecutive terms, in which case a board member can stand again for election after a gap, of typically one to two years. I want to emphasize that if the recruitment pipeline is not healthy, it will likely cause other challenges and/or be indicative of other challenges in the organization and it is an area the board should address.

All these practices can be helpful in establishing a healthier balance of new ideas and organizational wisdom in an organization.

Staggered Terms

In tandem with term limits, staggered terms provide several benefits to an organization.

Staggering terms (where elections are held every year, but not every board member is up for reelection) creates a continuum of perspectives from those directors who have served the longest, to those with intermediate tenure, to those who are new and hopefully bring fresh perspectives. Staggering terms is a commitment to measured change and a consistent in-flow of new people and ideas.

Ideally, each election would have a “class” or “cohort” of directors in which more than one new board member is elected at a time. This is valuable because having a cohort, even if comprised only of two new members, creates a shared experience. The new directors won’t feel isolated as “the only newcomer.”  They can compare notes. As they progress through service the other class member(s) serve as colleagues who will have shared memories on the same timeline.

The size of the class for each term, the term length, and the number of terms will vary from board to board. Generally, terms of 2-4 years are optimal, with a term limit of 6-10 years. Many institutions have good reasons for shorter or longer term limits depending on whether they are a school, a foundation, or a civic organization.

Board Recruitment Pipeline

If the recruitment pipeline is not healthy, it is likely to cause or indicate other challenges in the organization. The board should identify and address these challenges.

In many cases, nonprofits wait until just before the annual meeting to brainstorm, cultivate, interview, and invite new board members. Over the years, I’ve seen many jump straight to “invite” without any of the necessary relationship building, often resulting in a “no” or in a new board member who is uncertain of what they have committed to.

Like the development process, board member recruitment is a year round process, with many similar foundational elements since both are predicated on building a strong relationship of support for the organization. It needs steady and consistent attention, and when done well, results in a stronger board.

Conclusion

Term limits and staggering terms require bylaws change and thoughtful discussion about the specific details. These changes can make a significant difference to a board’s effectiveness in supporting the organization and in its impact, as well as making a difference in board member satisfaction. While new opinions and experiences can be unsettling, it can also re-energize existing board members and provide allies for organizational evolution.

It is easy to disregard the internal structure of the board for the pressing challenges that every board addresses. Good practices around terms ultimately support addressing those challenges by expanding the universe of current and past board members who provide governance and are advisors.