Family Business Board Of Directors

FAMILY BUSINESS BOARD

Why do Family Businesses need a Board of Directors?

The governance model for family business ownership is the Board of Directors. This is a major deficiency in SMEs. The board can assist the controlling owner by adding new perspectives.

Businesses need a highly experienced and visionary Board to:

Strategize the way forward for the family business
Define authority, accountability and responsibility for the owners and the managers of the business

How to form the Board of Directors for the Family Businesses?

While building and developing the Board of Directors, the following questions should get answered:

Why is it important for the business to have a formal Board of Directors?
Should owners be included in Board of Directors?
How can the business owners contribute effectively?
What should be the roles and responsibilities of the Board of Directors?
Does the family business need independent directors?
How can independent add value to the family business?
What is the role of the board of directors in Strategic Management?
How can the Board of Directors assist in Succession Planning?
Will the Board of Directors assist in drafting and executing the family policies, values and family constitution? And have consensus of the family?
What should be the compensation of Board of Directors: family directors and independent directors?
What are the expectations of the owners from the Board of Directors?
How do we evaluate and maximize the contribution of the Board of Directors?

It is essential to have an effective Board of Directors, professionalize the business governance process, probably add professional independent directors for focused value addition in the family business.

Benefits of having a Board of Directors in the family business?

An effective Board of Directors can help the family business as follows:

Sustaining the business through good governance
Strategic decision making for business continuity
Informing unhappy family members and the shareholders about the business performance and the decisions taken thereof