Managing a family business is no easy feat. All family members want to be seen as vitally important to the business but how does one maintain the all important ingredient of harmony in order to ensure the plain sailing operation of a family business?
An ideal board works like a symphony (derived from the Greek word for “harmonious composition or arrangement”), where the individual musicians have great talent, but the orchestra produces a collective sound that is extraordinary.
To achieve this extraordinary sound within the framework of a family business is not that easy and external contributors may have to be relied upon in order to achieve the common goal through neutrality.
Perhaps the family business has reached a point in the evolution of their corporate governance where they have either recruited or are considering recruiting outside, independent directors to the board. The choice of outside directors is critical to the performance of the board, and the likelihood is that there is a need to establish criteria for director selection. Equally important is the concordance of the directors, where the collective benefit is greater than individual contributions. This requires attention to not just individual skills and experience, but also to personal attributes, as well as synergies that might emerge as a result of directors’ distinct value and joint collaboration.
Among the skills and experience that shareholders look for in director candidates, some of the most common include:
- Board experience
- Strong financial literacy
- Strategic planning skills
- Industry or related industry experience
- Strong leadership skills
- Experience with effecting change or significant growth within an organization
- Family business experience
- A strong network
Additionally, directors must possess specific characteristics and attributes that will combine with other talent around the table to produce effective council to management.
The optimal mix of personal attributes is more difficult to find than the skill sets and experience base, which by themselves, are easily accessed. A really smart person who has experienced great business success is not necessarily a good choice if he/she does not demonstrate a capacity to work effectively as a member of a group, which by definition is interdependent. This is one of the reasons why the chair’s job is so critical. The chair is really the “conductor” of the orchestra who must ensure that each artist has an opportunity to both share his/her talents as well as enhance the talents of others.
Once a candidate who meets the criteria from both a skills and attributes perspective is identified, consideration must be given to the benefits of integration. You might ask: How much ego does the candidate group demonstrate? Will that get in the way? What about the inclination to build consensus within the group? Is there good distinction among candidates on what type of data each seeks and how information is processed? Is there someone who is comfortable playing a devil’s advocate role?
Is the style of inquiry distinct among the candidates? Does at least one of them show a good sense of humor? Does it appear that there is some capacity to manage dissension well?
( All Statistical information presented in this blog has been obtained from an extract of an article from the Family Business Consulting Group based in Chicago)
At the Family Business Office we can offer you assistance in dealing with family business succession planning issues through incentives supporting advisory and mediation services. Contact us today on [email protected].