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Helping Family Businesses
Prosper Across Generations®

Directors Ask: What's My Role

By John Ward, Ph.D.

We, and many others, are passionate advocates of independent directors for family business boards. They bring experience, perspective and objectivity to complicated issues. But they may also bring different views of their roles as independent directors.

Advisor

Fiduciary

I'm here to offer my best advice.It's their businessand it's their decision on what to do.They know the business better than I. It's their marbles.

I'm here to represent the interests of others---other shareholders, employees and the community.I have a duty to persuade them to do the "right thing for all.

But I hope they take advantage of our advice.Otherwise what good are we? It's no fun if you don't feel you're making a difference.

If management isn't attentive to our views, then we have to really persuade them of their weaknesses. Otherwise we're not doing our job.After awhile, we're obligated to resign or replace the leadership.

 

Either way, with a board of independent directors comes great responsibility for management to listen well and build a mutual consensus on the next steps of action.

Good independent directors often bring a bit of both of these perspectives to the boardroom. They can serve most effectively if the owning family has done the hard work of articulating their own goals and values and communicating to independent directors how it is hoped they will serve the family business.

 

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