Board of Directors

Corporations in the U.S. typically require a board of directors (BoD).

In a nutshell: The BoD represents the interests of the shareholders between shareholder meetings, while overseeing, advising, hiring, and sometimes firing senior management.

For many smaller international companies it seems that all it takes to make the BoD of a subsidiary work is to have a member of senior management of the parent company presenting the decisions of the home office at the local level.

This, however, overlooks a key responsibility of the BoD: To be advisor, sounding board, and close partner of local management (and to parent company management).

An experienced multi-cultural executive and outside board member with hands-on experience managing entities in Europe and the U.S. will also be a ‘translator’ (and often an arbiter) between both management groups, their business cultures, rules, and customs.

More often than not, the outside board member is the best supporter, confidant, and ‘protector’ of the local general manager vis-à-vis European management of his/her parent company.

It is unfortunate that – out of resistance to having yet another ‘supervisor’ – it is, however, often the local general manager influencing against the addition of such outside board members.

Typically, the general manager of a foreign subsidiary does not lose his/her job because of missing practical qualifications, but because of misunderstandings and an inability to manage disagreements with key partners at headquarters.

A local outside board member more often than not has a similar knowledge of the needs and demands of the local market environments, and will probably be able to understand and support many of the ideas and strategies of the subsidiary management.

If nothing else, an outside board member will thus show to management at headquarters that often the views of the general manager of the subsidiary are not born of stubbornness or faulty logic, but rather are founded on local experience and a solid understanding of the prevailing  rules and customs.

Instead of arguing about lacking cooperation or calling for more integration in the global group’s structures and habits, the focus can return to the practical question of how to overcome – together – any hurdles hindering the development of the company and its success in the local markets. A discussion less emotionally charged, and thus more productive.

[Egon L. Lacher, Managing Partner/Miami & Tom Kennedy, Principal/Boston]