Chapter 4Family Business Roles and Relationships
Roles
Within a family enterprise, there are four distinct roles: Owners, Board, Managers/Employees, and Family. Some individuals will play more than one role; some may play all four. Be forewarned: the descriptions below may seem foreign to owner-managers who run their businesses, because the distinctions may seem unnecessarily specific, particularly the description of the independent board. The independent Board of Directors described in this section has become increasingly common as family businesses have borrowed governance practices from public companies, but certainly not all family enterprises have boards comprised of a majority of non-family industry specialists. We have used the independent board here, not to enter the debate over advisory versus fiduciary boards, or to recommend one form of board over the other. Independent directors can bring experience, expertise, connections, and perspective; they can also bring assumptions about the purpose and strategy of the business that don't align with the owners' shared purpose or vision for the core capital. We've highlighted the independent board here because it can create impediments to engaged ownership that a family/owner-driven board might not, by further distancing owners from active participation in decision making.
Owners
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