Many of our clients have either transitioned to, or are in the midst of transitioning to a more professional board, made up of both family members, and independent outsiders. Based on a survey we conducted with business owning families, there is a clear distinction between the rated “effectiveness” of a board with just family members (47%) versus those with either a minority, or majority of independent board members (91% versus 100% respectively).
This is telling, and may foster further interest and/or action in moving forward with an independent board. Yet, that transition by itself will be insufficient to produce an “effective” board. Boards (Advisory or Fiduciary) add value for a number of reasons, and composition is just one reason for the value boards bring to shareholders. Below is a list of other important variables that influence the effectiveness of your board:
- A clear, specific agenda that outlines both the content and the purpose of each board topic;
- A board packet that:
- Includes all the pertinent information board members require (no superfluous, ‘thrown-together’ information, but a collection of succinct, meaningful data);
- Focuses the readers’ attention on the two or three critical strategic issues that will be discussed at the board meeting;
- A packet that arrives at least one week in advance, so the board members can adequately prepare for the meeting, and organize advance phone calls with questions if necessary.
- Some social time to set up a ‘rhythm’ for the actual meeting – typically a dinner the night before the meeting.
- A strong Chair – someone who not just moves the group along from one topic to the next, but someone who can listen to, understand, assimilate, and feed back to the group the meaning of what has been discussed, and what implications those discussions have for future action.
It is tough to fit ALL of the components of a successful board into a blog. But this provides a quick summary of items to think about when developing and managing your board for optimal value.