Establishing an Effective Board
Increasingly, family businesses are interested in establishing effective boards. Research has shown that an active board is one of three variables significantly correlating to multi generation family business survival. Family business leaders seek to maximize the contribution of their boards through effective board management and careful attention to board composition, particularly the inclusion of talented outsiders. Following are the steps you can follow in attracting and utilizing a professional board:
Understand the board's role and process. How would a board work in your family business? What can we expect from the process?
Prepare a board mission statement. Why have outsiders on your board? What is the role of the board? How will the board add value?
Determine the appropriate size and composition of your board.
Develop position descriptions for board members. What are the characteristics qualifications and experiences desirable for family, executives and outsiders? What qualifications will best suit the strategic needs of your business?
Identify and recruit the best members for your board. How do you attract the best people to serve on the board? How much should you pay board members?
Manage the board process. How often should the board meet? What should be included in the board agenda? How should meeting time be allocated? Who should attend board meetings? What is the role of the CEO in the board process? What board committees should be established and how should they function? How should relations between outside board members, management and family owners be managed? How do you keep board members actively involved between board meetings? What should the term of office for directors be? How do you facilitate board meetings to get the most benefit from the board resource?
Solicit feedback on board meetings to continuously improve the process. How do we establish and maintain the effectiveness of the board process and individual advisors? How and when should we replace board members?
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