How Boards Serve Owners' Goals
In previous issues of Family Business Advisor we’ve outlined the responsibilities of owners:
to set corporate goal ranges for strategy to achieve;
to establish the values underpinning corporate culture;
to define the governance structure; and
to articulate a philosophy that balances the interests of shareholders with employees, customers and partners.
In this and future columns, we’d like to propose the role directors play in support of their expectations by owners. In this issue we’ll outline questions the board can ask to serve the owners’ corporate financial goals.
Are financial goals clear and properly measured?
Are the goals consistent with other shareholder expectations (e.g., values and philosophy)? * Are proposed business strategies likely to achieve the goals?
Are the risks of the strategy understood and are they appropriate to business an d family goals? * Are the goals understood by management and by all the owners of the business?
Are the systems in place to monitor and report regularly on the goals?
The four goal areas we recommend for discussion among owners, directors and management are (1) growth, (2) risk, (3) liquidity and (4) profitability.
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