The Continuing Barriers to Board Refreshment

Board refreshment is essential to strong corporate governance. It ensures that boards remain dynamic, forward thinking, and equipped to navigate the complexities of today’s business environment. Despite widespread recognition of its importance, achieving meaningful board refreshment remains an elusive goal for many companies. According to Spencer Stuart’s Director Index, the average tenure on S&P 500 boards is 7.8 years — a figure that suggests inertia rather than agility in the boardroom.

A recent survey of BoardProspects

Members underscores this challenge, with a majority of respondents identifying the lack of term limits as the most significant impediment to board refreshment. While this is a major concern, it is only one of several barriers that hinder the renewal of talent and perspectives at the highest levels of corporate leadership. Below, I will explore five key obstacles and offer practical solutions to each.

1. Lack of Term Limits

Term limits are a natural starting point in this discussion. Without them, directors can remain in their roles indefinitely, which may lead to complacency and a resistance to new ideas. While experience is invaluable, there is a fine line between wisdom and stagnation. Long tenures can result in an insular board culture, where directors are less likely to challenge the status quo or embrace innovative strategies.

Solution: Implementing term limits can help ensure regular infusion of fresh perspectives. This time frame allows directors to contribute their expertise without risking the onset of groupthink. Companies that are hesitant to adopt strict term limits could consider introducing voluntary retirement ages or a policy of regular board evaluations that emphasize the importance of continuous renewal.

2. Lack of a Retirement Age

The absence of a mandatory retirement age is another factor that contributes to prolonged tenures. While older directors bring experience and institutional memory, they may also hold onto their positions longer than is beneficial for the board’s overall effectiveness. The concern here isn’t ageism but rather ensuring that the board maintains a balanced mix of perspectives and energy.

Solution: Establishing a retirement age — commonly set between 72and 75 — can be an effective way to encourage turnover while respecting the contributions of senior board members. This practice, already adopted by many leading companies, helps create space for new directors without forcing sudden or disruptive changes.

3. Fear of Disrupting a Well-Functioning Board

There is often a reluctance to make changes to a board that is perceived as functioning well. The fear of disrupting camaraderie or upsetting the existing dynamic can lead to stagnation. This mindset overlooks the fact that even the best boards benefit from regular refreshment.

Solution: To mitigate the fear of disruption, boards should cultivate a culture that views refreshment as a positive, ongoing process rather than a necessary evil. By framing board changes as opportunities for growth and evolution, companies can maintain a high-functioning board while still welcoming new talent and ideas.

4. CEO Influence in Board Appointments

When CEOs exert significant influence over board appointments, it can stifle true board refreshment. A CEO who handpicks board members may prioritize loyalty over independence, leading to a board that is less likely to challenge management or propose innovative strategies.

Solution: To counteract this, companies should strengthen their nominating committees, ensuring they operate independently of the CEO. Establishing clear criteria for board candidates — focused on diversity, skills, and independence — can also help in creating a balanced and effective board.

5. Lack of Board Service Restrictions

Without restrictions on serving on multiple boards, directors may overextend themselves, leading to diminished focus and effectiveness. This can also reduce opportunities for new directors who bring fresh energy and perspectives.

Solution: Boards should adopt or strengthen policies that limit the number of directorships a member can hold simultaneously. This ensures that directors remain fully engaged with their responsibilities and that there is ample opportunity for new candidates to join the board.

Board refreshment is not just about replacing tenured directors with new faces; it’s about ensuring that the board remains a dynamic and effective body capable of guiding the company through an ever-changing landscape. By addressing these barriers head-on, companies can foster a boardroom environment that is both respectful of experience and open to new ideas — ultimately leading to better governance and stronger corporate performance.

At BoardProspects, we believe that by tackling these challenges, companies can build boards that are not only refreshed but also revitalized for the future.