Those three refreshment tools were also considered the most effective by respondents.
“The use of a skills matrix has enhanced the selection process,” one survey respondent wrote. “A continuous effort to establish a pool of potential candidates has proven to be effective as directors age off.”
No other strategies were cited by a majority of respondents. The fourth and fifth most cited refreshment responses are voluntary in nature — retirement/resignation facilitated by the director (44%) and individual self-assessments (40%). Board-driven refreshment actions were somewhat less common, including mandatory retirement ages (38%), tenure limits (20%) and retirement/resignation requested by the board (19%).
“I would formalize taking the onus off the existing board, who by employing these strategies, are in constant conflict of interest with the need to evolve the board and the boards thinking,” one respondent wrote. “You need strategies and tools that remove or supersede their self-interests in favor of the company/business/brand.”
Opinions are mixed about tenure limits and mandatory retirement ages
Please rate the effectiveness of the following refreshment to:
|
Very effective |
Effective |
Somewhat effective |
Not very effective |
Not effective at all |
N/A |
Mandatory retirement age |
21.9% |
22.2% |
17.0% |
10.2% |
4.9% |
23.8% |
Tenure limits |
14.0% |
20.8% |
15.6% |
9.6% |
4.6% |
35.4% |
Tenure expectation setting |
10.5% |
22.4% |
23.3% |
7.9% |
3.5% |
32.4% |
Full board assessments |
25.6% |
35.6% |
21.0% |
7.2% |
1.4% |
9.3% |
Board committee assessments |
22.6% |
35.9% |
20.8% |
6.8% |
1.6% |
12.3% |
Individual director self-assessment |
13.3% |
23.6% |
22.2% |
14.2% |
2.8% |
23.8% |
Individual director peer assessment |
14.9% |
27.3% |
21.0% |
6.3% |
2.3% |
28.2% |
Board skills matrices |
28.4% |
34.3% |
20.1% |
5.6% |
1.4% |
10.2% |
Director voluntary retirement |
16.5% |
27.3% |
19.3% |
11.7% |
4.6% |
20.7% |
Request director resignation |
16.5% |
25.9% |
15.4% |
8.2% |
2.6% |
31.3% |
Decision to not re-nominate |
20.1% |
29.1% |
12.8% |
6.3% |
2.5% |
29.2% |
Among the 28% of respondents who said that their board needs to change its boardroom succession strategies, tenure limits was the most cited strategy to adopt (53%). However, as of 2024, only 9% of S&P 500 boards use term limits, according to the 2024 U.S. Spencer Stuart Board Index. It will be interesting to see whether this practice gains traction in coming years. Meanwhile, mandatory retirement age, utilized by 67% of S&P 500 boards, ranked third (36%).
Respondents whose boards use either of those strategies cited them as among the least effective tools for board refreshment. Specifically, about 19% consider mandatory age requirements to be ineffective, while 22% say the same about tenure limits.
In open-field responses, a few respondents saw tenure limits and retirement ages as “cop-outs” for boards not willing to have tough conversations.
“Limits and rules are a crutch for boards unwilling or uncomfortable with making decisions that are responsive to shareholders and their best interests,” one wrote. “Hold underperforming boards accountable — don’t introduce unnecessary ‘churn.’”
Another common sentiment was the idea that extended experience on a board is not in and of itself a bad thing, citing the considerable time it can take for a director to gain familiarity with a company. “Turnover was needed on our board,” one respondent explained, “but the loss of industry knowledge and relevant operating experience will weaken our governance for at least a while as the new directors (who are strong) take time to learn.”
Board culture is a key factor in boardroom evolution
What do you believe are the primary barriers to effective boardroom succession strategies for your board? (Respondents selected all that apply; top 6 responses are shown.)
The top barriers to boardroom change cited by respondents stem largely from board culture: 35% cite reluctance to remove directors whose skills are no longer relevant; 32% say their boards are hesitant to remove underperforming directors; 26% cite personal relationships among board members; and 22% point to lack of urgency. Indeed, some variation of “cultural resistance to changing the board” was a common theme in the open responses.
“Create a future-ready board by making refreshment a regular part of board meetings, not something that is handled only in emergencies,” one respondent said. “That also reduces director concerns that such discussions are threatening to their position and, thus, encourages more open conversations.”
And while the vast majority of respondents rate having a formal boardroom succession as either extremely important (35%), important (41%) or somewhat important (16%), 24% of respondents identified a lack of a clearly defined board succession strategy as a primary barrier to effective boardroom succession strategies. This highlights a common challenge: understanding and recognizing the importance of best practices does not always translate into effective implementation, underscoring the need for boards to translate awareness into actionable strategies.
“Boards’ roles have become increasingly complex; boards require an increasing level of professionalism, enterprise understanding and relevant skills to be effective,” said one respondent. “Without a comprehensive plan, boards can fall prey to groupthink, irrelevance, uncontextualized decision-making and, in the extreme, cronyism.”