SITUATION
For years, a small distributor of welding materials had followed the practice of most small fi rms, treating the board of directors as merely a legal necessity. Composed of two co-owners and a retired steel company executive, the board was not a working board. But the company, run informally with traditional management methods, was profitable. After attending a seminar, the majority owner decided that a board might be useful for more than legal or cosmetic purposes. Thus, he invited two outsiders-both division heads of larger corporations-to join the board. This brought the membership of the board to five. The majority owner believed the new members would be helpful in opening up the business to new ideas.

Question 1 Can two outside members on a board of five make any real difference in the way the board operates?

Question 2 Evaluate the owner's choices for board members.

Question 3 What will determine the usefulness or effectiveness of this board? Do you predict that it will be useful? Why or why not?