How Long Is Too Long To Serve On A Board of Directors?

There are three situations that I will cover. The one-man show, the promising SME and the established corporate organisation.

The one-man company often has no board or even some defined accountability partners. The enthusiasm and ethos of the owner-manager combine to give the business direction. The word director here was for purposes of company registration. He remains the boss, mutongoria, chemogeet, sonko whichever title suits the situation.

Much as this type of business would benefit a great deal from the presence of directors, many times, availability of funds and the prevailing cognitive processes dictate that the owner-manager remains the de facto leader.

Change may however happen here if a lender or a long-term strategic partner insists on the formation of a board as a condition for funding. Resistance here always comes from the potential exposure to the tax mess carried by the small business alongside other 'aibu ndogondogos'.

Many one-man shows practice creative accounting and may even not file tax returns. Such inertia also comes in to hide potential weak points that suave financiers exploit to get a bigger share for less money.

So, in the case of the single owner business, too long a time on the saddle may not reflect as much but a clear cut succession plan is badly needed.

Ever seen those outfits run by the same person as you went through primary school then through high school and even when you finished university, the old man is still running the same business? That is how long is long in these types of outfits.

The established SME often has a board in place but in this country, many stable SMEs still see no need for active directors. They still have them as paper-based directors. A growing company needs a defined board.

It still surprises us a lot that often, an unwelcome structure is forced on SMEs when competition forces them to seek resources to fund growth. So let's take the case of a board that is formed under such circumstances. How long should they serve?

The owner must declare his retirement age at the outset of the new leadership formation. Because the clock ticks slower, a CEO in such an organisation should not go beyond 10 years. And for institutional memory purposes, it is best if he now sits as a non-executive director.

For established corporate organisations, directors should serve for a three or four-year renewable term and exit at the end of their time on the board.

This is easier written than done. Do you have the resolve to adhere to best practice?