No management team needs to work in isolation
A formal Board of Directors is often composed of non-family members who are separate from the family council, but it is important to note that the Board can still be made up of family members, some of the management team, and non-executive directors too. Non-family members are usually selected outside professionals who can best assist the business from a leadership perspective. Board members generally have deep expertise in particular aspects of business management or the industry in which the family business operates. The Board is particularly focused on the business’s strategy, operations, and leadership advisory.
Advantages of Board of Directors outside of business advisory/planning
1. Board reporting packs
Board reporting packs create structure and formalise governance and reporting processes, leading to efficiency, focus and alignment from meetings and planning sessions. Often a family business discusses business affairs over the dinner table, which can be unstructured, unmanaged, and easily dominated by strong opinion or character. Holding regular Board meetings recontextualises meetings to be more business-focused and instils accountability and discipline amongst family members who are expected to prepare reports on their performance.
2. Minimises conflict
Outside members reduce conflict, providing an external perspective for issues that may have been skewed due to personal bias. If something goes wrong within the business, it may be easier to report concerns or seek advice from somebody outside the family, who can access safe harbor protections more easily than somebody with deep and intimate ties to family affairs.
3. Input on sensitive and complicated financial issues
Distancing the company from the family. While family businesses often think of company assets and money as theirs, a slew of tax legislation and legal considerations muddy the waters and could lead to significant financial and compliance implications should the family’s finances be tied too directly or closely with the company. A Board of Directors can assist with providing input on sensitive and complicated financial issues to alleviate regulatory burdens on the family’s personal affairs.
How we can help
Our team at Grant Thornton is made up of qualified consultants who understand family dynamics and are accredited as specialist advisers with peak bodies, including Family Business Australia and the Family Firm Institute.
While we cannot be on the Board of Directors for our clients, we can steer family and business values through helping your business set up a Board of Directors, assist in building an Agenda and reporting pack, and a timeline for reports to be provided.
Contact our team of experts today for advice around your family business and its Board of Directors.
