Expanding the Role of the Private Company Board
Most private companies report having a Board of Directors. Typically, the role of these private company Boards is for the owners to meet and make decisions about the business – frequently financial decisions.
Although these owner meetings are important, there are other elements of a Board’s governance role that private company owners might find helpful.
A key one is objective business insight. Adding independent Directors with diverse skills and experience to the Board can help the Board spot risks and opportunities it didn’t see before. Although it’s sometimes difficult to admit we don’t know it all, the truth is we don’t – and adding outside expertise can make an important difference to the Board’s impact on the business.
A second key element worth considering is accountability. Owners tell me they do better when they do what they say they’re going to do. They tell me that frequently, the difference between a good year and a great year is how well they stick to their plan. So, having a private company Board that holds management accountable can also have a large impact on business success.
Adding independent Directors is typically a key ingredient of expanding the role of the private company Board. For lots of private company owners, that isn’t easy. Entrepreneurs are notoriously fearful of outsiders in their business and skeptical of what they might bring that the owners don’t already know. Some owners overcome those fears, others don’t. Every business is different. However, the logic behind expanding the Board’s role beyond owner meetings has proven compelling for many successful private businesses.