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Who Should Be On Your Board?

Let's face it: Not every family member is cut out to be on your board of directors.

Speak to family business owners about boards of directors, and you'll likely get a wide variety of opinions about whether boards should even exist and, if so, who should be on them. Certainly, it's considered an anomaly for first-generation family firms-and often for second generations as well. Is a board necessary when the founder or the founder's son or daughter is running the company? Why? Even when family businesses do start thinking about further professionalizing their businesses in terms of boards of directors, it often happens slowly. Notes Colette Lombard Hoover, a principal of Oakbrook Terrace, Illinois, accounting firm Crowe Chizek and Co., who advises family businesses with her husband, Edwin, "Development of a board of directors is more of a process than a single act."

That's part of the advice the Hoovers gave client David Hintzsche, president of Hintzsche Feed, Grain and Fertilizer, a Maple Park, Illinois, agricultural supply and grain elevator company. Hintzsche's father and uncle started the business in the early 1960s, and the company is now equally owned by six shareholders: David, his three brothers and their two cousins. For years, the six of them constituted their own board of directors. Then the Hoovers advised that outside board members might make a valuable contribution to the company's growth, suggesting a board of five members.

The Hintzsches pondered their own roles. "We talked about the size of the board and how we'd work it if we only had three members of the family on it," says Hintzsche. "We decided that we'd always want both families represented, so if our number on the board was pared down to five, we'd have two members from my family and one from my cousins' family. We thought maybe we'd rotate membership as long as everyone wanted to serve."

Ultimately, though, the Hintzsches left themselves on the board and added three outsiders, for a total of nine members. They developed criteria for their outside board members, but not for themselves. "We're all in our 30s and 40s now, so the issue isn't pressing yet," says Hintzsche. But he admits they'll have to do that in the future-when, and if, the third generation comes into the business.

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This article was originally published in the May 2001 print edition of Entrepreneur with the headline: All Aboard?.

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