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Myths About Boards for Privately Held Organizations

Myths About Boards for Privately Held Organizations image

The expertise gained by having a board of directors can offer critical strategic advantages for companies, but many avoid putting one together because of the myths surrounding them. Here are some of the common myths about boards and why you should ignore them.

1. Control would be lost

Directors serve at the pleasure of shareholders. If it seems as though one or more board members are trying to exert too much control, it takes only a meeting of the shareholders to replace the dominating board members.

2. Too much bureaucracy

A board is not there to manage the company; it’s there to deal with the long-range outlook and provide strategic direction for the organization. If the board’s role is understood, board members won’t interfere in operations or create bureaucracy.

3. I can’t get good directors

Aim high and put forth the same effort to recruit directors as you would to recruit employees. Understand what roles need to be filled within your board and make sure that the directors you bring on have the necessary knowledge and experience to achieve your strategic goals.

4. Boards are too expensive

The advice and expertise of a solid board of directors is invaluable. If you’ve recruited good directors, the board will more than pay for itself.

5. Boards waste time

The role of the board is not to manage your company day-to-day. If the directors seem to be meeting too often or addressing operational instead of strategic matters, it’s time to refresh everyone on the roles of governance vs. management.

6. Directors will sell for us

If you’ve aimed high and recruited the proper directors for your board, it’s true they may open doors. However, it is not the board’s job to be your sales force.

7. I shouldn’t because my advisors don’t recommend it

It is one of the board’s duties to help you assess your advisors. If your advisors discourage you from adding a board, you may want to ask yourself what their motives are for disregarding a best practice.

One case where a board of directors may not be necessary is the period before a business reaches about 40 to 80 employees. During these early phases, companies are often moving so rapidly that they won’t have time to listen to a board. A good way to test the waters in this scenario is to try an advisory board to see if the organization benefits from it.

Questions?

For more information on creating a board, contact Marjorie Engle using the information below.

Marjorie Engle

Senior Vice President
Organizational Development and Family Business Services

Marjorie Engle guides clients and their companies through executive coaching, transition and succession planning, organizational analysis, conflict management, and corporate strategy development. A specialist in assessing and developing family councils, advisory boards and boards of directors, she has extensive experience with family-owned, closely held, and public companies across many industries, as well as with not-for-profit organizations.

Engle serves as associate director of the Kansas Family Business Forum, hosted by Wichita State University’s Center for Entrepreneurship. She holds a certificate in Family Business Advising with Fellow Status from The Family Firm Institute, is a certified coach with Family Business Partners, and a certified Change Leader.