Joint Venture Board Attendance: Two’s Company, Thirty’s a Crowd

joint ventureJV board meetings are the beating heart of joint venture governance. A mélange of disparate JV owner and management wants and needs are cast into a quarterly session that shapes the future direction of the business. Structured well, a board meeting promotes candor among directors, enables discussions on challenging strategic issues, and allows for collective decision-making in a timely fashion.

Now imagine walking into the Board meeting and seeing not only your fellow JV directors and the JV CEO, but also the rest of the JV management team plus a dozen other faces from across owner organization. What was expected to be an intimate session to tackle sensitive topics suddenly takes on a very different atmosphere. Candor is replaced by caution, real discussions are hard to hold, and conversations veer from strategic to tactical as the additional shareholder participants pepper JV management with comments and questions to resolve their own issues. Decision-making and good governance suffer accordingly.

In our experience, board meetings with large numbers of participants – and an associated lack of norms to shape the behavior of attendees – are often associated with boards that are indecisive, inefficient, and ineffective. The purpose of this note is to summarize our views on why JV board size (and by extension, meeting size) matters, share our recent benchmarking of JV board size and attendance across 36 natural resource JVs, and discuss what best practice on board size and attendance look like in a JV context.


Research on corporate boards has consistently shown that the overall size of a board matters. As a general rule, smaller boards are more cohesive, more hands-on, and more efficient. Studies show that the optimum size for a decision-making group is seven people and that each person added above this reduces effectiveness by ten percent. Fewer voices around the table leads to more space to dig into issues with follow-up questions and extensive debate, leading to quicker and better decisions. Even eye contact and candor have been shown to change when boards exceed ten directors.

One recent study of 400 large-cap businesses across ten sectors, including energy, telecoms, technology, health care, and industrials, found that companies with smaller boards (i.e., eight to ten directors) generated substantially higher shareholder returns on average across a three-year period. It is no surprise that publicly traded firms are embracing smaller boards.

The issues with large boards and board meetings are exacerbated in JVs. It is challenging enough when a JV board exceeds the 8-10 director range. But unlike their corporate brethren, JV boards also attract additional attendees, including members of JV management, and subject matter experts and functional representatives from the owner companies. Having 15-20 participants in a JV board meeting is not uncommon, and 30 or more is not unheard of.

Such a large number of JV board meeting attendees undermines group dynamics and good governance in a number of subtle ways:

  • Large groups undermine individual accountability by making it easier to view any given issue as “somebody else’s” problem
  • Large groups lead to meetings that emphasize presentations and Q&A over discussion and joint deliberation especially if shareholders have a pattern of unofficial participants intervening with questions
  • Large groups encourage individuals from the same stakeholder to sit together, which reinforces an “us vs. them” dynamic versus a single “board team” (and makes it easier for peers to carry on distracting side conversations rather than paying attention to the Board)
  • Large groups with multiple participants from the same stakeholder drive people to speak cautiously out of concern for what may be internally repeated – or make the rounds in the other companies
  • Large groups lead people to stake-out positions, act tough, become entrenched, and defer decisions, rather than to listen and negotiate a compromise
  • Large groups drive the configuration of the room away from a true single Board table in a conference room towards a U-shape in a large room, which hinders the normal flow of discussion and makes it hard to hear (particularly so when speakers are soft-spoken or operating in a second language)

When corporate boards slim down, the data shows that they improve performance outcomes for shareholders. Our prescription for JV boards? Time to put your attendance lists on a diet.

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