Family Business Boards often play an important role in Corporate Governance. Such Boards operate as platform for decision making process and structure that will improve the decision making. The board should be a true board and not a rubber stamp deal. If a true board is developed and such board meets regularly then good dialogue among members to gain pertinent data and debating different viewpoints contribute to the good decision making process.
The purpose of forming a Family Business Board are the following:
Provide a platform for separating family and business issues
Maintain perspective on succession planning
Set deadlines and hold everyone accountable
Hire, evaluate and terminate outside professionals
Act as company ambassadors to the larger community
Set strategic direction
Provide evaluation of business performance and drive better outcomes
In the past company put family executives and company professionals on the board thinking that outside professionals would offer objectivity and constructive inputs to the family. But often this may not be true as hired professionals, being in a very tenuous position, may be worried that their objective stand may create a counter to the power structure at the cost of the assignment. So they may choose to remain silent on many critical issues in order to safeguard their position. It is advisable therefore to populate the family business board with key family members who drive the business.