{"id":1015,"date":"2023-10-04T08:05:02","date_gmt":"2023-10-04T06:05:02","guid":{"rendered":"https:\/\/blog.iese.edu\/family-business\/?p=1015"},"modified":"2023-12-12T18:38:01","modified_gmt":"2023-12-12T17:38:01","slug":"8-pillars-of-a-professional-board-of-directors","status":"publish","type":"post","link":"https:\/\/blog.iese.edu\/family-business\/2023\/8-pillars-of-a-professional-board-of-directors\/","title":{"rendered":"8 pillars of a professional board of directors"},"content":{"rendered":"

Robust corporate governance systems in family firms shouldn\u2019t be any different than those in well-managed non-family firms<\/strong> \u2013 at least in theory.<\/p>\n

In practice, it\u2019s another story.<\/strong><\/p>\n

Boards of directors in family businesses have adjacent psychological and psychosocial dimensions<\/strong>, and disregarding these dynamics can easily lead to tensions among board members.<\/p>\n

During my tenure as the holder of the Chair of Family-Owned Business, I coined the term P-BOD-MO<\/strong>, an acronym for a “professional board of directors in its modus operandi\u201d.<\/p>\n

To be honest, I had grown tired of \u201cprofessionalizing the board of directors\u201d being conflated with the integration of external board directors.<\/p>\n

Please note that I\u2019m using the term external<\/em> and not independent<\/em><\/strong> since a board member\u2019s independence can be directly influenced by the psychological and psychosocial aspects mentioned earlier.<\/p>\n

External directors may\u2013or may not\u2013be independent, and it\u2019s not a question of how much they\u2019re paid<\/strong> as some people believe. As I’ll address in a future article, it\u2019s far more complex and multidimensional <\/strong>than that.<\/p>\n

Today my focus is on the eight components of a P-BOD-MO.<\/p>\n

8 pillars of a P-BOD<\/strong><\/span><\/h2>\n

In a family-owned company, a professional board of directors must be able to effectively perform the following eight functions:<\/p>\n

1 – Help the owners stand firm on decisions<\/strong> that serve the company’s best interests, ensuring that internal family pressures don\u2019t undermine its best interests.<\/p>\n

2 – Understand the owner family\u2019s relationship with the company to ensure family employees and\/or owners are guided by a sense of responsibility<\/strong> and, in parallel, are treated fairly within the organization.<\/p>\n

3 – Coordinate the proper functions<\/strong> of the firm’s board of directors and family governance structures.<\/p>\n

4 – Foster a climate of trust<\/strong> and transparency.<\/p>\n

5 – Promote a culture of friendly dissent where people can \u201cagree to disagree.\u201d<\/strong><\/p>\n

6 – Play numerous roles within a flexible framework<\/strong>.<\/p>\n

7 – Ensure each and every member is held accountable<\/strong> for their actions.<\/p>\n

8 – Regularly evaluate board performance<\/strong> with the guidance of professional systems.<\/p>\n

Common roadblocks<\/strong><\/span><\/h2>\n

In the real world, family firms often confront obstacles when to comes to adopting the practices and dynamics of a professional board of directors.<\/p>\n

Without a doubt, the tallest hurdle is this: founding owners who know everything, do everything better, and have zero tolerance for anyone who contradicts or second-guesses their opinions.<\/strong><\/p>\n

In many cases, they discovered a business formula that worked well in the past, without considering that the future is moving in a radically different direction.<\/p>\n

Another common trait is their lack of clarity and separation<\/strong> between the firm\u2019s management and governance.<\/p>\n

And if they happen to be \u201clegends in their own time,\u201d<\/strong> things get a whole lot worse.<\/p>\n

 <\/p>\n

Homepage image: Benjamin Child<\/a> \u00b7 <\/em>Unsplash<\/em><\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Robust corporate governance systems in family firms shouldn\u2019t be any different than those in well-managed non-family firms \u2013 at least in theory. In practice, it\u2019s another story. Boards of directors in family businesses have adjacent psychological and psychosocial dimensions, and disregarding these dynamics can easily lead to tensions among board members. During my tenure as […]<\/p>\n","protected":false},"author":194,"featured_media":165,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[12,981],"tags":[117496,117523],"class_list":["post-1015","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-family","category-leadership","tag-board-of-directors","tag-corporate-governance","megacategoria-mc-family-business"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/blog.iese.edu\/family-business\/wp-json\/wp\/v2\/posts\/1015","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.iese.edu\/family-business\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.iese.edu\/family-business\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/family-business\/wp-json\/wp\/v2\/users\/194"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/family-business\/wp-json\/wp\/v2\/comments?post=1015"}],"version-history":[{"count":13,"href":"https:\/\/blog.iese.edu\/family-business\/wp-json\/wp\/v2\/posts\/1015\/revisions"}],"predecessor-version":[{"id":1065,"href":"https:\/\/blog.iese.edu\/family-business\/wp-json\/wp\/v2\/posts\/1015\/revisions\/1065"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.iese.edu\/family-business\/wp-json\/wp\/v2\/media\/165"}],"wp:attachment":[{"href":"https:\/\/blog.iese.edu\/family-business\/wp-json\/wp\/v2\/media?parent=1015"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.iese.edu\/family-business\/wp-json\/wp\/v2\/categories?post=1015"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.iese.edu\/family-business\/wp-json\/wp\/v2\/tags?post=1015"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}