What is the Ideal Board Size?
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Governance What is the Ideal Board Size?
While there are no fixed rules for the perfect board size, getting it wrong can create challenges for participation and work efficiency. Determining the ideal board size depends on a board’s ability to self-assess and have strategic discussions about the structure and culture the group desires.
Having a balance of skills and experience within the group can affect the number of board committees needed to run an organisation correctly. To avoid getting stuck on a ‘range’ of ideal board directors, think of board sizing as a part of your risk assessment process.
Boards must accommodate organisational needs and have the expertise to manage internal and external challenges successfully. Those that rely on too few or too many directors can weaken governance decisions, says Dan Byrne, writer for the Corporate Governance Institute.
Why is board size important?
According to the Australian Institute of Company Directors (AICD), an ideal board size has “enough members to fulfil their responsibilities, access the skills and experience they need, and to facilitate changes to composition without major disruption.” If the group is too small, it can negatively impact performance and governance due to a lack of expertise, diversity, and availability.
At the same time, the bigger the board, the higher the risk that it becomes unmanageable. An excessively large group of directors can make it difficult for everyone to contribute and undermine the group’s effectiveness. Understanding the size that works for you as a company leader can create a more adaptive board that responds proactively to changes and challenges.
“There is a direct correlation between company size and board size, with the largest companies having the largest boards,” says the AICD. As work responsibilities grow, directors must ensure that the size of their group is big enough to accommodate its needs and covers all of the skills, experience, and perspectives required.
Small Boards vs Large Boards
Ideal board size changes depending on the entity. Larger companies tend to have bigger boards, providing more diversity in perspectives and access to specialised roles such as legal and financial experts, community leaders, and skilled fundraisers. With large boards, the workload can be shared across all directors and more people are available to serve on committees. There are also limitations.
Larger boards can experience difficulty scheduling meetings. Members can feel less heard or seen, and take less ownership in their work. The group can have bad communication and unproductive discussions, and social dynamics can be a challenge. For example, smaller cliques can form, affecting cohesion and collaboration.
Directors serving on small boards often have a sense of responsibility towards the entity. Communication is better due to strong group cohesion, creating a space for aligned decisions and having tough conversations. People who serve on small boards can feel more seen, leading to more engagement. They need less administrative support, reducing the cost of managing boardroom activities and making it easier to schedule meetings.
However, there are limits to serving on a small board. Directors may become overwhelmed with work, leading to high turnover or burnout. Collectively, the group may be less skilled or knowledgeable in certain areas, and there may be less continuity during leadership changes.
What is the disadvantage of having a large board?
Research shows that when a board becomes too big, problems begin to creep in. One study found that when too large, group size can hurt decision-making performance, making it more difficult for people to evaluate solutions and solve problems. Another study concluded that there is a negative effect on board performance when the size of the group increases to six or more members.
An ideal board size can mean the difference between a productive vs unproductive board member. Rather than contributing to the efforts of the group, directors can end up ‘free-riding’ their time on the board and fail to follow up on committee assignments. Unproductive directors reduce the capacity of the board to fulfil its oversight role.
Board size may also affect relationships between directors. “Having too many members on a board can lead to an erosion of personal dynamics. A large board often results in the executive committee taking over the role of the board to ensure that important tasks are accomplished,” says retired CEO Norman Augustine.
Top Strategies for Managing Board Size
Here are some best practices for creating the ideal board size and ensuring your group fully benefits from the leaders who get a seat at your table.
Take a Long-Term Approach
Be forward-thinking when recruiting new directors, says Matteo Tonello, contributor at The Conference Board. According to Matteo, “Companies should look ahead several years for potential vacancies as well as the evolving needs of the company and the board.” Identify gaps in expertise, diversity of experience, and areas where long-term growth is needed.
Find a Balance
“Finding the right number of directors is a trade-off between the benefits of having sufficient competencies represented and the cost arising from increased free-riding among directors,” according to research. For small and medium-sized organisations, an ideal number is between three and five board members.
Assess Board Skills and Attributes
Different-sized firms require different-sized boards. If your group can cover key roles and subject matter experts in areas such as compliance, risk, or technology, you’re in good shape. When assessing board size, evaluate the collective skills of directors and the entity’s future needs. Avoid introducing roles for the sake of giving people something to do. Be strategic with board composition.
Assess the Risks
Geopolitical tensions, shifting trade policies, and AI disruptions have created new risks for companies. Assessing these risk areas is essential for adaptability, resilience and innovation. Choose board members and committee members with expertise in key risk areas as a strategy for mitigating top risks. Re-allocate roles when necessary to navigate big changes that impact the required skill sets of directors.
References
AICD. (2025). How Many Directors Must a Board Have? https://www.aicd.com.au/corporate-governance-sectors/not-for-profit/principles/board-composition.html
Bennedsen, M., Kongsted, H.C., & Nielsen, K. M. (2008). The causal effect of board size on the performance of small and medium-sized firms. Journal of Banking & Finance, 32, 1098-1109. http://www.kaspermeisnernielsen.com/BS_JBF.pdf
Byrne, D. (2025). What is the optimum boardroom size? Corporate Governance Institute. https://www.thecorporategovernanceinstitute.com/insights/guides/what-is-the-optimum-boardroom-size/
Tonello, M. (2023, December 7). Recent Trends in Board Composition and Refreshment in the Russell 3000 and S&P 500. Harvard Law School Forum on Corporate Governance. https://corpgov.law.harvard.edu/2023/12/07/recent-trends-in-board-composition-and-refreshment-in-the-russell-3000-and-sp-500/#3b
Additional Resources
How Big is Too Big? Directors and Boards
Sample Board Composition Policy
Tool for Assessing the Impact of Board Size
Board effectiveness: A survey of the C-suite
Frequently Asked Questions
How do I know what effect the board size is having?
You can evaluate the impact of your board size by considering the group's ability to function well, for instance, having productive discussions, making evidence-based decisions, and being accountable and engaged. If administration and cost are becoming unmanageable, it may be time to ask some less active members to step down.
Ask the following questions:- Are all board members productive?
- Do you have the right skills to accomplish our goals?
- How are the group dynamics?
- What criteria are you using to assess suitability when recruiting new members?
- Do people have no duties other than coming to the meetings?
- Are directors' feelings burned out or frustrated due to a lack of time?
- What do the bylaws say about the board size? Are boardroom processes aligned with the rules?
- When is board resizing a good option?
To reduce the board size, correct any inconsistencies with your bylaws and approach inactive directors about quietly stepping down if they have no interest in re-committing to existing needs. Consider re-structuring committees to reduce redundancies, and adjust quorum requirements to ensure the resizing doesn't affect your decision-making process.How do I resize the board?
The first step in the resizing process is to create a board profile and review what the group possesses and whether there are gaps. If significant gaps are identified, increasing the size of the board may improve its efficiency. If there are significant overlaps across directors, decreasing the board size may be a better option.
How do I reduce board size?
To reduce the board size, correct any inconsistencies with your bylaws and approach inactive directors about quietly stepping down if they have no interest in re-committing to existing needs. Consider re-structuring committees to reduce redundancies, and adjust quorum requirements to ensure the resizing doesn't affect your decision-making process.
