5 Ways a Board of Directors Can Help Companies Succeed
Every public, non-profit, and ESOP company and organization is required by law to have a board of directors. The primary reason is fiduciary responsibility. That is to say that a group of people outside of the company needs to ensure that the company is run in the best interest of all stakeholders.
Private companies on the other hand are not required to have a board of any kind; in fact, many do not. The reasons they don’t have either a board of directors or board of advisors are numerous: i.e. not wanting the oversight in order to keep sensitive information in the family or personal network.
Private companies with boards see 5 primary benefits:
- Strategy. Having outside experts that have already traveled the company path can help to ensure that the company gets maximum value with minimum risk.
- Accountability. Everyone needs a good boss—even the CEO/Owner. When there is a board, that means that every quarter the company will have to present the board with a business update. This helps the company stay on track with their business plan.
- Ownership. In second and third generation family businesses, a board can be the conduit for smoother transition and leadership selection.
- New opportunities. The board can often provide assistance to the company in making introductions to partners, investors, and suppliers.
- Help the CEO succeed. Often times, a business owner CEO could use some help in working with the company’s senior management team to assess talent, to bring accountability, and to work on strategy.
If done correctly, a board can greatly accelerate both growth and profitability!