Quoted by the Wall Street Journal, baseball legend and down-home philosopher Casey Stengel, described his responsibilities as a board member for a California Bank as, "There ain't nothing to it. You go into this fancy meeting room and you just sit there and never open your mouth. As long as you don't say nuthin' they don't know whether you're smart or dumb."

With respect for Casey, board members, especially in a family business, need to do more than just show up. Richard Ferry, co-founder and CEO of Korn/Ferry states, "There will be no free ride for the directors of tomorrow. The bottom line is performance, and directors will have to deliver."

Some owners of family businesses get uncomfortable at the mere suggestion of forming a board of directors in their business. They see a board as little more than a group of outsiders telling them how to run their business. The whole idea goes against the grain of the entrepreneurial spirit that got them where they are today.

An effective board is not about telling someone how to do their job anymore than it is about moving a business towards a bureaucracy and away from a friendly family atmosphere. An effective board is not about rubber stamping, window dressing, paying back favors or creating a forum for mediation. And, above all, it should not be considered a family perk.

John Ward, a researcher of family boards, believes there are several valuable benefits to having outside boards. "First, and most importantly, they can stimulate the owner's aspirations and confidence about the business. Next, boards help deal with sensitive or uncomfortable issues that otherwise get put aside." (i.e. succession planning, employment and promotion of family members, estate planning, compensation for family members, dividend policy) And, still another benefit according to Ward, is the way the presence of the board raises expectations of everyone in the business. With people closely reviewing the business, day-to-day conduct becomes more efficient and effective.

Peter Drucker suggests that every business enterprise needs a government. He says, "A business needs both an organ of overall leadership and final decision as well as one of overall review and appraisal. It needs both a chief executive and a board of directors."

Creating an outside and independent board offers many valuable benefits such as:

1. Objectivity and independence to management and leadership. When the people sitting on the board are financially dependent on the chairperson, that chairperson can fall in to the trap of believing they can do no wrong.
2. Higher level of professionalism. An outside board helps family-owned businesses recognize the need for professionalism and other critical situations and help management take appropriate action.
3. Evaluate the CEO's performance. Boards should set policy and evaluate the CEO. Everyone benefits from qualified, objective feedback.
4. Help formulate strategy. Having a group of seasoned decision makers with various perspectives and awareness is an excellent way to explore and define policies for business growth.
5. Forces the CEO to step out of the forest to see the trees. It is important that the CEO be able to step out of the day-to-day fray of operations to plan, organize, and control effectively for the future of the business.
6. Capital. Capital comes in three forms: Intellectual, financial, and network. Think of board members in terms of which type of capital they may bring to your business.
7. Image asset. Adding highly respected individuals to your board increases the image of your company in the marketplace and enhances the stockholder's value of your company.
8. Mentor the CEO. Many CEO's are learning the job as they go. Just like the rest of us, CEOs need friends, advisors and professionals to offer guidance as they learn.
9. Management succession. The final test of greatness for a CEO is choosing a successor. Whether a family member is the best candidate to become the new CEO should sometimes be answered by an objective board with the company's best interest in mind.

ReGENERATION Partners recently conducted a phone survey with 52 CEO's of client family business firms. The firms these CEO's worked in ranged in sales from $1.5 million to $1.6 billion, were 95% domestic (US), and were comprised of 3 to 13 directors. Almost all the boards had at least one outside director (85%), and 72% of the CEOs served on at least one other board. These CEOs reported that "strategic planning and experience of expanding into new markets" were the greatest benefits of a board.

However, in case you think that an outside board of directors is always the answer for family owned businesses, here are some of the reasons why these CEOs felt that some boards they served on failed to meet expectations:

• The owner or CEO does not have a clear and articulated purpose for board members. Every board must have a clear understanding of its purpose.
• When board members are not active. Board members need to know the industry and the company niche. Additionally, they must have a feel for the strengths and weaknesses of the company's leadership team.
• Membership has too many senior managers. There is an old Texas expression, "He who tells the truth better have one foot in the stirrup." Inside board members are sometimes afraid to speak up for fear of creating conflict with their boss.
• Membership includes too many personal advisors and friends of the CEO. Their should be a justifiable reason why each director is chosen for a board position.
• Board did not come together as a team. Teamwork does not imply agreement on every issue, but it does keep the board focused on the issues and not the personalities involved.
• Critical information is withheld. If a CEO cannot trust his or her own board with critical information, then either replace the CEO or replace the board.
• Members are too passive. The best boards are confident and assertive when making decisions about the business.
• There are too many members. The optimal number of board members depends on the size and scope of the business but as a general rule, boards (excluding foundations and public boards) are effective with no less than five and no more than thirteen members.
• Chairman dominates. The most frequent complaint from our CEOs was directed at chairpeople that dominate the board meetings.
• Outside directors don't devote adequate time to board business. CEOs expect their board members to devote between 80 and 160 hours a year to board business.
• Work party attitude exists. Boards cannot solve problems, only approve or disapprove courses of action approved by the CEO. "If boards are forced to choose between alternatives, a crisis of leadership often arises." (Tuck and Earle, Strategy & Business, fourth quarter, 1996)
• Compensation is inappropriate. Too much or too little; both are problems.

Not every business will realize a cost/benefit value that justifies assembling a board with outside directors. Depending on the size, complexity and maturity of a business, a board of advisors may provide similar value as a board of directors. A board of advisors might include the company's accountant and lawyer as well as a business consultant and a trusted family friend or relative.

George Clement, CEO of Clement Communi-cation, said it best. "Bringing outside members on to a small company's board of directors is like giving up smoking. Once you've done it, you will be telling everyone else to do it too."

Pretending all is well is a common ailment among family-owned businesses. A carefully chosen board of directors is an "over the counter" remedy that may help cure the ills of sustaining growth for many family firms.