Dialogue in Design

The Active Board System (TABS)TM is a unified succession and transition planning concept and process that is easily adaptable to all families and their businesses. In TABS, the Board is the “balance point” between owners and managers. In other words, the Board keeps the owners and managers “in balance” by making sure that these two working groups solve their distinct issues and problems.The Board does this by owning the process of directing the managers and owners to address and resolve their respective issues and problems. TABS require the owners to come up with a plan, setting out their values, needs, and the goals of the owners as a group.The Board reviews the owners’ plan by asking relevant questions including questions about the succession and transition plans. Once the owners’ plan is accepted by the Board, it is given to management, which prepares its strategic and annual plans for the company. The Board reviews management’s plans by asking specific questions, including are management’s plans consistent with the owners’ plan. According to TABS, the Board does not create or develop either the owners’ plan or management’s plans. The owners create and maintain their plan, and the managers develop and maintain the strategic and annual plans for the company. TABS maintain there are seven basic Alternative Board Structures (ABS). Which level is most appropriate depends on the succession and transition plans. No one Board makeup is right for every family business. ______________________________ When family business consultants discuss succession planning, they usually talk about what a business owner wants to accomplish, different structures to achieve the business owner’s goals, and the processes to use. But when family business consultants and family members talk about governance as part of succession planning, they often do not start with asking what approaches, structures, and processes are available and what might be most helpful to a particular business and ownership group. Rather, the starting point is generally whether a Board of Directors is needed or not.The reason for this is not hard to find. Business owners tend not to want a functioning Board, especially with outside directors, while family business consultants tend to assume that a Board of Directors with some outsiders on the Board is a necessary component of a successful transition plan.This article recommends that these biases be set aside in favor of a more discerning approach to governance. The Active Board System (TABS) TM offers a foundation to use effective governance to help solve such difficult transition issues. TABS is “active” in that the Board actively directs both owners and managers. It is a “system” in that the Board is an integral part of the process of owning and managing the business, and it has specific responsibilities, authorities, priorities, and boundaries that are defined and respected, while at the same time tailored for each family business.