Why Don't More Family Firms Have Independent Directors
We recently surveyed about 80 family business leaders as to why they don't have independent outsiders on their Board of Directors. They say:
The idea never occurred to me. Having an outside board is a subject that few propose to business owners. Rarely do their accountants or lawyers bring up the subject. The idea just isn't a part of their consciousness. When they do think about it, they become very interested, but . . .
I doubt I could attract the types of people I want. The modesty and inexperience of many business owners cause them to feel that CEOs of other, bigger, successful companies would probably not be interested in them. Besides, they don't know many who aren't their friends or in a related business. We find that many other CEOs are very willing to consider a directorship. The business owner just needs the courage and preparation to ask. But ...
I'm not sure I want a board like that. Many business owners who have considered an outside board have negative images of it. They think of the liability, and the hassles and power struggles on public company boards. Or they think of the many meetings and detailed discussions they've been a part of with not-for-profit organizations. Both images are de-motivating. And, both images are incorrect. Private company boards are and should be very different from those of not-for-profit and public companies.
We've found that once family business leaders are aware of the possibility, aware of the feasibility, and aware of the special benefits and form for private companies that they become keenly interested. We also know from our research that business owners who do have independent directors on their boards are very happy with the results. We just need to get those who have outside boards to talk with those who don't.
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