Adding Outside Directors To Your Board Can Help In Guiding A Company’s Strategic Direction
Many times we are asked to serve on “Advisory Boards” for companies that do not have any outside directors on their existing Board of Directors. In many instances, particularly in small to medium sized companies (also in companies that are family owned or closely held) the Board is made up of owners and/or senior management that are all employed by the company. While there is certainly a place for inside directors on a Board, having independent Board members can be a valuable addition to the company Board.
Outside directors bring a broader perspective of the business environment and the economy and a broader experience base that can be immensely helpful in guiding the strategic direction of the company. Many times inside directors and particularly senior management directors are too vested in their own management decisions and strategies to make truly independent decisions on significant business issues such as mergers, acquisitions, dispositions, restructuring, etc. At times inside directors suffer from “tunnel vision” or “forest and the trees” syndrome or “that is the way we have always done it” mentality. An independent director/advisor can provide fresh perspective and challenge conventional strategies to help the Board make better strategic decisions.
If your company’s Board is made up of insiders, we strongly recommend that you consider adding an independent director or establishing an Advisory Board that includes some independent advisors. It will greatly enhance the effectiveness of your Board and Facilitate better Board level making decisions.