Whoever sits around the boardroom table of a family business wields tremendous influence on the performance and continuity of that family business.Therefore, selecting board members – both family members and independents – is a crucial step in getting the right mix of talent around that table to help achieve this feat.
A way forward could be to Develop a board prospectus to articulate the historical perspective, strategic vision and direction, agreed-upon board structure, and board member profile.
The family owners, or the committee that is guiding the search process, need to spend the time in deep discussion about what should be included in the board prospectus. The collaborative process of creating the prospectus gets your team on the same page.
Elements that help create a strong, content-rich prospectus include:
- A brief history of the company
- A family generational diagram
- An explanation of the ownership and management structure
- Business overview including high-level guidance statement of the values, vision, purpose and strategic direction of the company
- Board members’ roles and responsibilities
- Board member desired qualifications and character traits
- Board meeting information: frequency and location of meetings, committees, biographies on board members, compensation, term and protection (directors’ and officers’ insurance)
- The contact information of person conducting the board search
The most critical piece for locating the best-fit candidates is rigorously applying the desired qualifications and traits during the search process. While qualifications and traits vary by company, we have observed that some of them tend to screen out the stronger-matching candidates.
It is paramount to bring on board-members with family business experience. Board members with mainly public company experience are accustomed to spending more time on compliance and regulations rather than on strategy and ownership matters. Contributing board members possess familiarity with the unique complexities of a closely-held family business and experience working within the dynamics of a multi-generational family business.
Key attributes when looking for the right candidate could feature the following:
- Industry Experience
Having at least one independent board member with deep knowledge about the company’s industry is beneficial, while equally valuable is to have board members from different industries and thus different perspectives.
- Demonstrated Results
There are plenty of candidates with many experiences, yet fewer have a track record of quantified leadership results. Seek out specific responses on how a candidate has produced meaningful results in his or her career.
- Financial Acumen
It is basically a given that any board member must have financial knowledge, particularly in helping to discuss the various options to improve the income statement, balance sheet and cash flow. Being a member of an audit or compensation committee is also a big plus.
- Stewardship Mindset
Understand the role of steward thinking: maintain and hold management accountable for performance and results, AND help management develop a successful family enterprise.
Demonstrated ability to work, listen and contribute in a team environment. Able to work cohesively with family members, executives and board members.
( All factual and 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].