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Neds Melb AICD Session

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G21 Agribusiness Forum
G21 Agribusiness Forum

External directors can help family businesses in several ways: 1) They can help implement important business disciplines like strategic planning and risk management while still respecting the family's core values and culture. 2) Companies that may benefit from external directors include those going through a transition from small to mid-size, those committed to growth, or those in changing industries or markets. 3) Effective external directors bring experience from different sectors, understand family/business dynamics, and are willing to provide a different perspective to challenge existing thinking.

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External Directors A Perspective From a Non Executive Director in Family Business Presented by Bill Winter MAICD
External Directors Only one third of family business use a formal board of directors or an external advisory board ( 2009 survey KPMG/FBA )
External Directors A key Challenge for NEDs How do you help implement key business disciplines and still maintain the family vision, culture and core values that got to where you are today ?
External Directors Dealing with boards does not come easily to most family business founders The board will inhibit their entrepreneur skills They cannot come to terms with the changing business compliance and risk management environment of the 2000s Family board members dont take kindly to advice from outsiders. Family business and family issues should not be shared with non family members
External directors Who should consider NEDs ? Companies going through transition from small to mid-size Companies committed to growth Companies in an industry or market that is changing Companies that are struggling with succession
External Directors What should you expect from the NEDs Joint responsibility for the survival and growth of the business Understand the connection between family and business Raise issues and ask questions to challenge the thought process Provide insight, and a benchmark against other business Assist with long term strategic direction
External Directors Supplement and not substitute existing management expertise Bring new disciplines to the business while respecting the family core values. Respects confidentiality Understands the liabilities and responsibilities of directors and officers with reference to the Corporations Act 2001 Stick nose in and keep fingers out respect the line of delegation
External Directors The attributes of an effective NED Experience from different business sectors, business insight Works harmoniously with other board members, the Chairman Someone who is not connected socially or personally. Preferably not your normal accountant or lawyer Understands family / business dynamics, next generation expectations Is willing to put forward an opinion that is different from the norm
External Directors Willing to be involved as required outside set meetings Is willing to participate in formal board and director reviews Prepared to take on continious learning Has a high focus for risk management and compliance
External Directors Take the position that you are custodians for future generations Is it about building wealth in the long term ?
External Directors Many family business boards do not understand the reality of risk management and compliance with reference to the Corporations Act 2001 .
External Directors In one year ( 2007 ) Record number of ASIC prosecutions. ASIC prosecuted 561 company officers for 1,133 contraventions of the Corporations Act with fines and costs of $1.1 million. Six good behaviour bonds and 320 hours of community service (Company Directors Magazine)
External Directors Most Family businesses are not aware: Even if you are not formally a director but make key decisions and are involved in decisions normally made by a director - you are in fact a shadow director. Refer; ( Corporate Affairs Commission v. Drysdale ( 1978 )
External Directors Do you have checks and balances in place ?
External Directors Bill Winter MAICD Point North Consulting www.pointnorth.com.au Email: [email_address] Mobile: 0411536424 If you have any questions please email or call me and I will be happy to offer my comments or point you to someone who can assist if it is outside my area of expertise.

More Related Content

Neds Melb AICD Session

  • 1. External Directors A Perspective From a Non Executive Director in Family Business Presented by Bill Winter MAICD
  • 2. External Directors Only one third of family business use a formal board of directors or an external advisory board ( 2009 survey KPMG/FBA )
  • 3. External Directors A key Challenge for NEDs How do you help implement key business disciplines and still maintain the family vision, culture and core values that got to where you are today ?
  • 4. External Directors Dealing with boards does not come easily to most family business founders The board will inhibit their entrepreneur skills They cannot come to terms with the changing business compliance and risk management environment of the 2000s Family board members dont take kindly to advice from outsiders. Family business and family issues should not be shared with non family members
  • 5. External directors Who should consider NEDs ? Companies going through transition from small to mid-size Companies committed to growth Companies in an industry or market that is changing Companies that are struggling with succession
  • 6. External Directors What should you expect from the NEDs Joint responsibility for the survival and growth of the business Understand the connection between family and business Raise issues and ask questions to challenge the thought process Provide insight, and a benchmark against other business Assist with long term strategic direction
  • 7. External Directors Supplement and not substitute existing management expertise Bring new disciplines to the business while respecting the family core values. Respects confidentiality Understands the liabilities and responsibilities of directors and officers with reference to the Corporations Act 2001 Stick nose in and keep fingers out respect the line of delegation
  • 8. External Directors The attributes of an effective NED Experience from different business sectors, business insight Works harmoniously with other board members, the Chairman Someone who is not connected socially or personally. Preferably not your normal accountant or lawyer Understands family / business dynamics, next generation expectations Is willing to put forward an opinion that is different from the norm
  • 9. External Directors Willing to be involved as required outside set meetings Is willing to participate in formal board and director reviews Prepared to take on continious learning Has a high focus for risk management and compliance
  • 10. External Directors Take the position that you are custodians for future generations Is it about building wealth in the long term ?
  • 11. External Directors Many family business boards do not understand the reality of risk management and compliance with reference to the Corporations Act 2001 .
  • 12. External Directors In one year ( 2007 ) Record number of ASIC prosecutions. ASIC prosecuted 561 company officers for 1,133 contraventions of the Corporations Act with fines and costs of $1.1 million. Six good behaviour bonds and 320 hours of community service (Company Directors Magazine)
  • 13. External Directors Most Family businesses are not aware: Even if you are not formally a director but make key decisions and are involved in decisions normally made by a director - you are in fact a shadow director. Refer; ( Corporate Affairs Commission v. Drysdale ( 1978 )
  • 14. External Directors Do you have checks and balances in place ?
  • 15. External Directors Bill Winter MAICD Point North Consulting www.pointnorth.com.au Email: [email_address] Mobile: 0411536424 If you have any questions please email or call me and I will be happy to offer my comments or point you to someone who can assist if it is outside my area of expertise.