Board composition in family businesses.
Ward (1997) suggested that for the rapidly growing family business, an active Board of outside directors can serve a number of functions, including assisting family business owners to deal with feelings of isolation in their daily struggle to survive and to excel, heightening accountability of the business, and improving quality of corporate decision making and planning without significant loss of privacy.
About 51% of family businesses report having a Board of Directors, with the majority comprising one-to-two directors. On average, Boards comprise two family executive Directors. A relatively small proportion of enterprises indicate Boards comprising: one family non-executive director (16.3% of firms), one non-family executive director (6% of firms), and one non-family non-executive director (6% of firms). Reasons given for the absence of non-family executive directors are set out in Table 10.1.
Board meetings
Approximately 41% of family businesses hold regular Board meetings (Table 10.2). On average, Boards meet once every three months; with 14.5% of owners indicating that the Board meets monthly.
Author Credits
This article is an extract from “The MGI Family and Private Business Survey 2006”. The RMIT University team that developed and conducted this Survey comprises Professor Kosmas X Smyrnios and Mr Lucio Dana. MGI Boyd Principals Ms Sue Prestney and Mrs Naree Brooks provided valuable input during the research process. For more information concerning this survey, please contact MGI Boyd, Melbourne – Sue Prestney; P: +61 3 9521 3000 or E: melbourne@mgiboyd.com.au or W: www.mgiboyd.com.au