How often should boards meet?

• VINCIA CLOETETHE minister of public enterprises, Leon Jooste, recently announced a curb on the frequency of parastatal board meetings. He deplored exorbitant sitting fees earned by board members.

On top of that, there is a concern that is perhaps more burning – whether frequency results in effective board and company performance. It is opportune, therefore, to query how often boards really need to meet.

A common rationale for frequent meetings is that board members will be less engaged in the organisation if they do not show up each month. In point of fact, this is imprudently using the board meeting as the only touch point with board members. On the other hand, it is probable that the workload of the board has increased rather than reduced over time.

A useful way to determine the number of board meetings needed is to draw up an annual board meeting plan.

First, schedule the dates of the action items that the board routinely needs to accomplish, for instance approving the annual budget and financial statements, directors’ performance review, or approving the annual board work plan. Careful scheduling and prioritisation is almost always needed to make the board’s workload manageable. The process of prioritising will naturally give a board a clear sense of whether or not it is committing enough time, and thus whether it is meeting as frequently as it should.

Then, consider what other big items the board needs to tackle in a given year. Maybe it is a review of the assumptions behind a strategic plan, or a thoughtful probe into those most difficult questions, like what is the impact that we are trying to have?

Important considerations precede board meetings’ scheduling.

A minimum or set number of board meetings per year is not prescribed by law, regulation or listings requirements. The King Code does, however, recommend that boards meet regularly, at least quarterly, if not more frequently as circumstances require. The articles of a company or a shareholders agreement concluded between a private company and its shareholders generally regulate the minimum number of board meetings that must be held by a company.

Some organisations may opt to have more flexibility in board meeting scheduling, perhaps to accommodate non-executive directors to get a grasp of the complexities of the company’s business. Meetings should be scheduled more frequently as the business of the company demands – for example, very early stage or beleaguered companies may require regular guidance from the board. Equally, when a crisis strikes, frequent meetings will be inevitable.

As the company matures, and management gains experience, the board can relax its frequency to six weeks, of which every second meeting could be a teleconference. Ultimately, in mature companies, quarterly meetings is the norm.

Alternatively, within an existing schedule of quarterly meetings, a thorough performance analysis could be conducted at every second or third board meeting. That would allow intervening meetings to focus chiefly on strategic and policy issues and key decisions. This is not to suggest that board members should not receive monthly financial and performance reports. This gives the board the option, if performance was to deteriorate, to bring its next scheduled ‘monitoring’ discussion forward, or to have a teleconference, for example, to address emergent issues at short notice. By the same token, when a board does not have sufficient confidence in executive performance and executive reporting, it is likely that it will feel a compulsion to meet more frequently than might otherwise be necessary.

If the board is meeting too frequently, it is effectively reviewing every management decision, and is de facto a part of senior management. Arguably, this is more control than a board should exercise. The board should concentrate on situations where there is a great deal of uncertainty and novelty. This is where the collective wisdom and responsibility of the board comes into its own.

It may be that with fewer meetings, board members will be up for longer meetings where they can get much more accomplished or tackle bigger discussion questions. Board committees generally assist management to single out matters of board concern. Besides, from a director’s workload point of view, having fewer board meetings may actually increase the chance of attracting, and perhaps retaining, the type of directors needed on the board.

For all intents and purposes, determining the frequency of board meetings is far from formulaic. The above considerations mean that the frequency of meetings is, manifestly, a judgement call for each board to make. A board should consciously review its meeting frequency from time to time – perhaps as part of an annual self-assessment process. It should resolve to meet as often as it needs to, and for the appropriate duration, guided by whatever is necessary to fulfil its responsibilities.

Board meetings are not inexpensive, and board members are typically very busy people. Fewer meetings will save the organisation money, and will increase the chance of having all board members present. This should be a valid concern in any organisation dedicated to making the best possible use of its resources. Provided that a board is functioning well, however, the time taken up by the board and the resources it consumes along the way should be thought of as an investment rather than a cost. If a board is not adding value, it is a different story.

Either way, a corollary consideration regarding the intricacies of director compensation becomes significant.

In an age of information overload, Sunrise is The Namibian’s morning briefing, delivered at 6h00 from Monday to Friday. It offers a curated rundown of the most important stories from the past 24 hours – occasionally with a light, witty touch. It’s an essential way to stay informed. Subscribe and join our newsletter community.