MARKETING MATTERSCEO JOURNAL
corporations to those at small family- owned businesses. And I’ve been on both sides of the board table, as an outside director and a CEO. Trough it all, I remain convinced a good board can add real value to any business, par- ticularly smaller ones, and the alterna- tive can be downright dangerous. As I see it, boards populated exclusive-
ly by members of the owner’s family rep- resent an opportunity lost. Tese boards are often fractious and uninformed, and sometimes cause “family trouble,” but, in the end, their impact is typically negligible because whatever they say can be and usually is ignored. I have found these boards rarely add value and rarely make waves. Such boards pose little risk of causing catastrophic mistakes. Instead they have the very real risk, because they lack knowl- edge and influence, of allowing or even encouraging the business to drift into serious trouble. Te most dangerous boards,
Boards That Add Real Value I
DAN MARCUS, TDC CONSULTING INC., AMHERST, WISCONSIN
’ve worked with boards of direc- tors of all kinds over the years, from those at large, multi-national
a high level of industry and/or profit- making expertise, and the courage of their convictions to the table. Such boards have the independence and combined expertise needed to properly vet management initiatives and actually teach managers a thing or two about their craft. Moreover, these boards are most likely to take their fiduciary re- sponsibilities seriously, because they are free from the personal attachments that can prevent them from seeing beyond the owners’ personal preferences. Te best boards also have an ongo-
ing relationship with the management team. First, they understand that their
consists simply of a structured process by which issues of particular import are identified and fleshed out, board consensus is captured, and the resulting management team assignment seam- lessly integrated into follow-on meeting agendas. Absent such a mechanism, im- portant ideas, suggestions and general board wisdom arise but too often are lost, and thus the board’s ability to add value is diminished. Finally, the best boards are com-
Te best boards substantially comprise disinterested
outsiders who bring recent and relevant management experience, a high level of
in my view, are those character- ized by cronyism and packed with the owner-operator’s pals. Because of longstand- ing personal relationships and because many members are or were business owners themselves, these boards often lack any sense of fiduciary duty and, instead, are beholden to the narrow, personal preferences of the own- er-operator. I have found this fact too often turns directors into apologists and causes them to advocate in ways that run counter to the broader interests of the business and its diverse stakeholders. I have seen such boards suck the life out of companies and otherwise seriously impair their competitiveness and profit- making capability just to uphold and indulge the owner-operators’ right to do whatever he or she wants. By contrast, I believe the best
boards substantially comprise disin- terested outsiders who bring recent and relevant management experience,
industry and/or profit-making expertise, and the courage of their convictions to the table.
duty is to wholeheartedly support the CEO and staff or, if such sup- port is not warranted, to advocate for changes that will result in a staff they can support. Second, it is my view that selected members of the top and middle management team should be meaning- fully involved in the board process so they can engage with, contribute to and benefit from the wisdom and value these boards can provide. Next, the best boards employ a
mechanism, short of a formal motion and vote, by which they can speak with authority on matters of import. Such a mechanism emanates from a clear un- derstanding of the management team’s responsibility to internalize and act upon certain board pronouncements. It
prised of members who are willing to invest themselves in the companies they serve by making a serious effort to get to know the management team and understand the company’s challenges and opportuni- ties, key elements of business strategy, and the non-financial context within which they will be working. Members of the best boards go beyond the financial statements to add real value by providing specific, rather than merely generic, input and advice. Led properly by an experi-
enced, open-minded chairper- son, value-adding boards can create an environment where CEOs and their management teams can look forward to board meetings. Well, almost. If not that, then at least the manage- ment team can count on the
board to play a positive, developmental role and eschew the all-to-common approach of directors who believe their role is little more than to refuse to be satisfied. Tis amateur attitude is unfortunate and counterproductive as such directors quickly lose credibility, the management team’s respect, and the ability to provide any value at all. It’s my view that all metalcasters—
large and small, family owned and not—should employ a value-adding board. In fact, building one is a key CEO responsibility and another way to create a genuine competitive advantage.
Keep the conversation going. Reach the author at
tdcmetal@wi-net.com to comment on this or any CEO Journal column or to suggest future topics.
February 2014 MODERN CASTING | 63
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