The Director's & Officer's Guide to Advisory Boards

By Robert K. Mueller | Go to book overview

14
ADVISING THE FAMILY
BUSINESS BOARD

A fund-raising letter from the Niagara Lutheran Home in Buffalo said in part: "The building and grounds committee has presented a rough estimate of $75,000 for needed repairs to the board of directors." Perhaps adding some outside directors or advisors, at less cost, could remedy this situation. I know from many years as an active director and advisor to boards in both family and public companies that experienced outsiders can often perform preventive maintenance on the hidden stresses inherent in governing a business. In family companies in particular these stresses stem from the ever-existent clash of goals and values of individual family owners also serving as directors and managers.

The outside director or advisor can perform a distinctive service by enabling the board of a family business to give the right priority to the important things to worry about. Effective outsiders provide objectivity in key relationships, transitions, and interactions. Closely held corporation boards usually have closely knit membership, often family members, the family attorney or banker, other relatives, and long-time friends. This makes up a coopted group which, at times, is unable to effectively deal with the business issues objectively. This hangup is due to the social contracts that implicitly exist between board members. Recently, I was asked to serve as an advisory director to such a family-dominated firm's board. After a lengthy get-acquainted exposure to allay fears of the family directors that such outsider contribution to their governance process would be acceptable and professionally offered, an arrangement was made that proved very helpful over a three-year crisis period.

-189-

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