Design of Boards of Directors and Family Board
To carry out the design of the Board of Directors of a Family Business, it will be necessary to consider how to achieve the difficult balance between the interests of the company and the wishes of the family owners.
Creating an independent Board of Directors is one of the most effective practices to protect and preserve a family business. It is for this reason, that a family business that wants to guarantee its continuity generation after generation will need to equip itself with corporate governance systems that simultaneously attend to the good functioning of the business and family harmony and in this context must consider how the Board of Directors should be that they need to have.
The Board must adapt to dimensions such as the generation, the size of the company and the size of the family and their interpersonal relationships.
In general terms, the Board of Directors must be a body governed by the principles of transparency, specialization, unity and efficiency, and represent the interests of shareholders and ensure compliance with current legal requirements. But in the case of a family business, another important responsibility is added, which makes it the main governing body where, apart from the Strategy, it discusses and understands the great issues of the family business such as Vision, Mission and Values.
In order to act with criteria and efficiency, the Board must be equipped with transparent and fair monitoring and decision-making processes. The foregoing, in many cases, involves the incorporation of external advisors, non-family directors and independent external board members, who, together with the family board members, must provide information and critical judgment to the owner-manager regarding their performance and their team, supervise and monitor management actions and help owners to stay firm in good decisions for the company, preventing pressures from the family to interfere in what is most convenient for the business.