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Ask the expert: Extended board observation

Ask the expert: Extended board observation

All family members should attend at least one of their family business board meetings. Observing a board meeting helps family members understand the fiduciary role that the board plays on behalf of the shareholders. Before any family member attends a board meeting, there are several key considerations:

> Confidentiality: Clarify the importance of the confidential nature of the boardroom discussions and dynamics.

> Agreement: The board should come to an agreement about family visitors and the Family Council should set a policy about board visitation including how many observers are allowed at each meeting.

> Observation: Visitors should be asked to refrain from speaking during the meeting.

> Seating arrangement: Organize the seating so that attendees can observe the meeting without disrupting the flow of the conversation.

> Executive session: Provide an executive session on the agenda at every meeting so that highly confidential matters, such as compensation or succession, can be discussed without visitors present.

> Debrief: Conduct a debrief post-meeting session with the observers and CEO, Chairman, and/or Lead Director to better understand the dynamics in the boardroom and to have an opportunity to ask questions about the business and board. At this session, attendees should be clear on what discussion points are public knowledge, can be shared with the family, or what must remain private.

> Social time: Provide an opportunity for attendees to talk with directors before or after the meeting at an informal meal or over break

Extended board observation can be a useful development tool for family members working towards board readiness. If a family member is interested in becoming a board member, he or she should have proactive discussions about what “readiness” looks like, how family directors are selected, how they are evaluated, and understand the expectations and fiduciary responsibility of a family director on the board.

The board is a critical component in business success. The integrity of the board proceedings should be preserved but allowing board observers can be one of the best ways to ensure that future generations see the value of the board and want to participate in corporate governance.



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