Nearly 90% of the world’s largest family businesses have a functioning board. A strong board helps reduce the risk of nepotism, internal conflict, inequitable allocation of ownership shares and succession woes. And well-functioning boards diligently monitor performance and draw on the industry knowledge gained through the years. Unfortunately, a board made up of only family members can experience governance issues due to the unique dynamics of family relationships. But independent outsiders can help family members navigate idiosyncratic personalities and the family dynamics that can impede smooth succession and sound business decisions. For family businesses to make the best decisions regarding leadership, purpose, business strategy and succession, they need to be able to reflect. Personal interests and feelings often cloud that reflection. Independent directors can provide the needed clarity as well as a fresh perspective. Since they are not part of the family unit — or a friend or paid advisor — they can bring the necessary objectivity to the difficult decisions, particularly those regarding strategic initiatives and management roles.
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