The three responsibilities of a Board of Directors

by Gale Martin, Director of Marketing and Membership at the S. Dale High Center for Family Business

Blanching at the thought of instituting a Board of Directors for your family business? You're not alone. Many family business executives don't like the idea of empowering a group of people who'll now make decisions the chief executive is fully capable of deciding him- or herself.

According to Bill Alexander, the May presenter at the S. Dale High Center's Educational Seminar Series, such a concern may be unfounded, that there are three (and only three) functions of a Board of Directors for a family-owned business:

1. Ensure the company has a clear direction (approving strategic and annual plans).
2. Ensure assets are properly employed to the benefit of shareholders (approving human resources plan and capital expenditures).
3. Ensure there is empowered and competent leadership in place (electing officers).

Now that sounds like a reasonable set of responsibilities for a board of directions--one that supports family business executives without interfering in issues that aren't the board's concern.

Based on Bill's guidelines for boards of directors, have you ever served on a board or staffed a board where directors where given responsibilities outside this well-defined purview of what boards should do? If so, what were the results?