Family Business Boards – A Lifesaver in a Time of Crisis

 

 

One of the biggest challenges we see in our family business clients is the ability to look outside themselves.  Having "blinders on" can lead to stagnation or real trouble.

By their very nature, families are insular.  It’s a trait that serves them well by "taking care of our own".  But when that same trait is applied to the business, a number of unintended consequences can arise.  

We often see that if a family business has a board (and “if” is the operative word), it is comprised of all family members. As well intentioned as they may be, this type of board typically leads to the status quo, a lack of truly good debate around topics, and power wielded by a single individual that few in the organization are willing to challenge. 

At a time when we are facing one the biggest economic and health crises ever, a board is the life preserver that businesses can turn to for support, advice, and direction.  A well-formed and functioning board will get in the trenches with the executive team, helping them work through issues.  

The best businesses have a culture where rigorous debate is not only allowed, but encouraged! As easy as that sounds, when all the seats at the table are held by the family, few (i.e. junior family members) are willing to step in the line of sight of senior family members. Not good dynamic for the family, and even worse for the business. 

A board that is comprised of BOTH family and non-family members can make a big impact on the business.  And it is typically the non-family members that create the best discussions, offering new perspectives and ideas, because they don’t have to worry about Thanksgiving dinner.  They are going to call it like it is, without bias, and help you see and react to challenges, as well as opportunities, in a timely manner.

We see family businesses develop boards typically in the second generation, but we also see smart founders who, as their company begins to scale up, begin building a board of advisors.  They know and appreciate that outside advice will serve them well. I often say, "you don’t need to know everything, you just need to know who to ask."

How do you fill the seats? When you think about board members, specifically non-family candidates, the key is to think:

-  What knowledge gaps are there in my business?  

-  What opportunities are we missing?  

-  What advice do we need to execute our strategy?

And then you go find that person who has the experience you don't have. The person who has the epertise to help advise the executive team, challenge status quo thinking, and support the execution of your strategy.  I promise you they are out there.    

One of the fundamental building blocks for a family business that is looking to build a legacy is getting Ownership on the same page. An effective board following a solid strategic plan can be the compass the business needs to maintain a strong leadership team, family governance, communication and harmony.

Don’t make the mistake of not moving forward with a board because you don’t want anyone to "know your business" or "tell you what to do".  Then don’t hire that person. Hire the person who aligns to your core values and can close a knowledge gap. Start building your board. It will bring incredible clarity and confidence that will allow you scale your business strategically in good times and bad.

Check out my video on the topic and get building!

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