Business owners frequently ask me if they need a board of directors for their company. They have become so accustomed to depending solely on their own skills to make decisions that they are very skeptical about the benefits of an outside board of directors. Sometimes they feel that the advice already available to them from their banker, attorney, accountant, other consultants, relatives and the company's management team is sufficient. These people certainly can provide the owner with knowledge, skills and insights that are invaluable for the successful operation of the business, but they are not an adequate substitute for an outside board of directors.
An outside board of directors should be an integral part of every business. Effective boards are one of the most valuable and least costly resources available to business owners. No owner should rely solely on advisers, family members and key employees who each usually have their own set of self-interests to protect. Every owner should select, recruit and establish an outside board of directors that consists of five to nine members drawn from ownership. non-family key employees and risk-taking business peers with extensive leadership experience. A good board will provide the business with a formal structure in which people who share similar values, interests, and a vision can work together to build something great - a thriving business. Every owner needs a competent board to serve as challenger, supporter, enforcer, conceptualizer and arbiter in order to help guarantee the long-term success of the business. A competent outside board will periodically review the company's mission, strategy, the performance of the CEO and key personnel, and the plans to ensure the continued success of the business. The board will support the owner, challenge him, occasionally disagree with him, help him conceptualize solutions to existing problems, arbitrate disputes among owners, enforce key decisions and monitor the implementation of business strategies. The objective, competent and compassionate involvement in the business by an effective board will pay rich dividends for business owners and their family. An effective board will help the owner decide how much growth is desirable, how the growth should be funded, how family-owners should be represented in the business, and how to move into the future without destroying what has been built in the past. It will help ensure the integrity of the business, its financial strengths, and its value to the communities in which it does business.