Rationale for having a non-Executive Director for a Family Business

Family Businesses need a member of the Board who is unrelated in every sense, familial or professional and who therefore can always be objective.

Benefits of hiring a non-Executive Director for a Family Business

1. An objective to assist the performance of the business and the happiness of all those involved by maximising the use of his experience, knowledge, training and independence.
2. Emotions are more reluctantly expressed with an outsider present.
3. Family relationship problems usually cannot be solved by the family alone because of the close family relationship.
4. The outsider will not take sides in a dispute but remain independent.
5. Family directors sometimes have no experience outside their companies; this experience is introduced by an outsider.
6. Beneficial outside contacts can be introduced by the non-executive including skilled family business consultants.
7. The necessary family and business structures could be advised upon and introduced.
8. Most banks would prefer an outside non- executive director.
9. An independent opinion can be applied to the matter of selection, appointment and training of family people.
10. Succession planning would be insisted upon and advised upon.
11. Mentoring of family directors at the time of individual change for them.
12. Family management roles in the business could be dealt with using agreed structures and procedures.
13. Directors’ remuneration can be independently reviewed for fairness one to the other.
14. Day-today disputes can be independently resolved.
15. Helping to plan solutions when an existing business is reaching maturity.
16. Assistance with formulating business strategy and plans on a day-to-day, medium and long term basis in order to assure the survival and success of the business.
17. Assisting with communication with family members and shareholders who are not working in the business.