Family Business Boards – A Lifesaver in Time of Crisis
One of the biggest challenges we see in our family business clients is the ability to look outside themselves. That can sometimes 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 (“if” is the operative word), it is comprised of all family members. As well-intentioned as they may be, these types of boards typically lead to the status quo, a lack of good debate around topics, and power held by a single individual with few in the organization willing to challenge them.
At a time when we are facing one the biggest economic and health crisis 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 the challenges.
The best businesses have a culture where rigorous debate is not only allowed, but encouraged. As easy as that sounds, when all the power sits with the family few, including junior family members, are willing to step in the line of sight of the senior family members. Not good for the career, 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 and new perspectives 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 G2, but we also see smart founders, as their company begins to scale up, do so as well. 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. What better place than a well-developed board.
When you think about board members, specifically non-family candidates, the key is to think:
- What gap is 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 done that and can help advise the executive team, challenge the status quo thinking, and support them in executing their strategy. I promise you they are out there.
One of the fundamental building blocks for a family business looking to build a legacy is Ownership that is on the same page, effective boards, strategic planning that guides the business, a strong leadership team, and family governance to promote communication and harmony. These are all challenges in family businesses, but the board is often the big roadblock to get over.
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 with your core values and can close a knowledge gap. Start building your board. It will bring incredible clarity and confidence that will allow you to scale up your business in good times and navigate the bad times more strategically.
Check out my video on the topic and get building!
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Tom Garrity is managing partner at Compass Point Consulting, based in Bethlehem, PA, a business consulting firm specializing in family-owned companies, primarily in the manufacturing, construction & professional service industries. Compass Point provides hands-on consulting & coaching to help businesses close performance gaps; give owners practical, actionable tools that drive growth; deliver training to develop leaders and position the business for successful ownership transition - all on their terms.
Learn more at: https://www.compasspt.com