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Whitepaper |
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What is the role of a Board of Directors . . .
. . . in a privately owned company?
Boards of directors are very common in very large corporations and a few of the larger privately owned companies. Typically these boards make a significant contribution. For most privately owned businesses, however, the cost of hiring a board of directors, plus the cost of Directors and Officers Liability Insurance coverage, can be overwhelming.
In addition, most entrepreneurs simply don't have a very comfortable feeling about having people look over their shoulders. Most owners of privately owned businesses, and especially family-owned businesses, believe that a board of directors is just for the really big companies. Although this is far from the truth, and most entrepreneurs really need to have a source of advice and support, they don't like the accountability of having to report to someone.
An outside Advisory Board is a viable option. The business owner can be aided in thinking outside of the box by a small group of independent advisors. Many privately owned companies have recruited such groups to advise them on business matters. The advisory board is especially helpful because business owners cannot usually openly discuss with employees, sometimes even with key executives, any plans that might affect critically those people who would be affected. So an outside board can be a valuable sounding board where the CEO of the privately owned company can speak openly and candidly. Usually such an outside advisory board is paid as much as a Board of Directors, so this can be an expensive approach.
Sometimes it is very difficult to take the time to recruit a board and to take the time to set an agenda for each meeting, and then to continually get the people to come to meetings. Communication with such a board should be frequent, it should be candid and it should address the complete aspects of the business, good or bad.
What is the right kind of board for a privately held company? Can the company afford to pay a board of outside experts? Is the CEO ready to report and be accountable to a body of outside experts? Can the business owner be humble enough to interface openly with this outside board?
One of the options is for the business owner to join a peer group discussion panel. These generally meet monthly and are often comprised of 10 to 15 people from different businesses. This can be a satisfactory arrangement for most cases that business owners want to discuss. The danger is that this group may be too large to deal with. In addition, the group is often assembled prior to the member joining the group.
Although the new member may be assigned by the organization that forms the group, based on the member’s income, experience, size of business, type of business, etc., there still may be some divergence of interests among the team members. In addition, the team may not have appropriate experts to address many issues. It could be said that this approach is similar to a prearranged marriage. It may look like a good idea on the surface, however there may be no collaboration based upon a matching of values.
Most business coaching organizations randomly assemble a group of business owners without consideration to their personal value systems. There is little matching that goes on relative to the business owner’s personal needs, the needs of his family, much less the needs of his business.
The WMO has found that the local team approach does have some validity. It is most effective when used as a “sounding board” for new ideas and for seeking solutions to fundamental problems. Nevertheless, WMO believes that privately owned business really needs an advisory board. This can be just two people, or perhaps five independent people with sound business experience. The WMO suggests that business owners establish a Virtual Advisory Board (VAB).
The Virtual Advisory Board can be assembled to include one or two members of the local team, and additional members can be chosen through the WMO Connective Wealth Network platform. The additional members can be located anywhere in the country and can be found through referral or through a search of the experts on the WMO Connective Wealth Network.
With this technology, it matters little where the individuals are located.
Communications on the WMO Connective Wealth platform is easy. Convenient meetings can be conducted with up to nine individuals, “face-to-face” on each of their video screens, chatting in a normal fashion as if they were in the same conference room. The business owner may share files, programs, spreadsheets, and even a white board with all of the people at their Virtual Advisory Board meeting.
The WMO Connective Wealth platform allows the business owner to create “circles of trust”. The “Virtual Advisory Board” is a good example of a “circle of trust”. The business owner may also establish a “circle of trust” for any project, such as for his estate planning. A “circle of trust” can be established for strategic planning. Access to each “circle of trust” is granted by the business owner. Access can include his current key employees, the business attorney, the accountant for the firm, and any other trusted individual that he wants to include. Any member of a “circle of trust” established by the business owner will not have access to any other “circle of trust” created by the business owner, unless granted by the business owner.
In this manner, the business owner can establish “circles of trust” to deal with any personal matter; with family matters such as the education of children; with business matters, such as creating a retirement plan for the employees; and even a community activity in which the business owner becomes involved.
For each “circle of trust”, and for each project, whether it is for self-improvement or for improvement of business operations, the business owner may create a “dashboard”. The “dashboard” is available for view by the members of the “circle of trust”. The “dashboard” presents current progress on each project. The information is secure and only available to those who have been given permission to have access.
This Values-based Collaborative Development Technology costs millions of dollars to develop. It has only been available to very large corporate and government users. Using the WMO Connective Wealth high technology platform, the business owner can take advantage of some of the greatest experts in the fields of technology, business management, legal services, and virtually any other fields or disciplines that are required by the business owner. It is the combination of this values-based platform and a high technology collaboration platform that make the WMO the most unique business service currently available for privately owned businesses.
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