The Value of Independent Directors

Last night’s speaker, Peter Johnson, shared with Center Members the value of having independent directors sit on Family Business Councils and Board of Directors. Johnson claims that independent directors bring with them their experiences, both positive and negative, which can help a company make difficult decisions and learn from the success and failures of others. Johnson also claims that an independent director will be able to ask the tough questions of management, and hold people accountable, without the burden of family baggage and history.

Another salient point that Johnson makes is that, essentially, an independent director will be a breath of fresh air to the company and will provide a new set of eyes to approach topics and dilemmas from different angles and offer a different perspective than what the company has done in the past. Sometimes all a business needs is to look at a challenge in a new light and the issue is able to be resolved easily.

Finally, Johnson says that independent directors provide stability for a company during times of crisis and changes in management, such as, succession by a new generation. An independent director will be able to mentor and coach the next generation so that they can smoothly grow and implement competent leaders of the next generation.

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About csuffamilybusiness

In 1995 Cal State Fullerton, the third largest business school in the nation, formed the Center for Family Business to assist family businesses in recognizing their common problems and in finding solutions to the unique issues that confront them. The Center's mission is to use education to help family businesses in our region grow and prosper and to keep harmony in the family.
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