Regardless of the size of your dealership, you may benefit from adding a board of directors. A small group gathered to discuss the pros and cons of working with a board of directors.
Pros
- A board of directors can sometimes be helpful dealing with family-owned companies by ensuring pertinent issues that need to be addressed are discussed, rather than allowing for “dirty laundry” to get buried out of view.
- It’s beneficial to have a board of directors with “outside eyes” (different perspectives) to provide insights to dealership management. This also gives managers some piece of mind that a plan has been discussed and put in place that will work to deal with any number of operational issues.
Cons
- But sometimes, boards can lead to micromanagement, because members may feel it’s their job to provide input on everything. It’s important to consider how much power you want to give to a board.
- Dealer managers should expect to undergo an educational process with board members on how dealerships are run.
Things to Consider
- How many members will be on a board of directors and what is optimum.
- Whether or not to pay board members, and do you pay once a year or per meeting. If you pay per meeting, attendance may be better.
- Do you need term limits? How do you get new voices on the board? One idea shared was to send a letter to stockholders stating a person is up for election, then there is some type of nomination process. There is 1 vote for each shareholder.
- Just because a board member has a stake in the dealership somehow doesn’t mean they should be treated differently in terms of equipment prices, labor rates, etc. No deals.
