“Best practices from boards of public companies,” by Margaret Pederson, Family Business Magazine, March/April 2014
Some family company boards have a reputation — sometimes deserved — of being created or strongly influenced by the CEO, especially if the CEO is the founder. Directors are often the founder’s golfing buddies, school friends, neighbors or friends-of-friends. When they are recruited by the CEO and owe their initial and ongoing board membership to that relationship, their independence can be compromised. This may be beneficial to the personal agenda of the CEO and the family, but it may not be in the best interest of the company in terms of either the short-term financial results or longer-term strategic positioning.
Truly independent board members can bring added expertise, related to the industry as well as to specific functions. They also broaden contacts, which can be valuable as the company expands into new products or services and additional geographic zones.
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