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What Kind of Board?

There are different kinds of boards of directors. Some are more advisory to management; others are more protective of passive shareholders. Some are very homogeneous in make-up; others are quite heterogeneous. Preferences can depend on your perspective.

 

Owner-Manager

Non-Employed Owner

I want a Board that buys into our strategy and helps us achieve our goals. I want a Board that is critical and challenges management vigorously.
I want a Board of diverse people who can bring creativity and fresh views to the business. I want a Board of similar people -- all of whom share our values and represent well our culture in the business and outside world.
I don’t need directors to think like me, but I do need their support. The more they all share the same values, the easier it is for me to be comfortable with them and to trust them.

 

Of course, the answer almost always lies in between. You want both common values and different points of view. You want both critics and supporters.

Resolving theses tensions takes lots of communication and explicit understanding of how boards work. The more time independent directors spend with non-employed owners, the more understanding and comfort they can develop. The more time top management spends with the independent directors, the more clarity and consensus can be developed on strategy while encouraging constructive debate. Most of all it’s valuable to discuss these selection-of-director alternatives at a family meeting so everyone understands the issues and the trade offs.

 

 

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