The Family Business - To board or not to board? - Phyllis J. Campbell
Part 2: How Family Businesses Can Frame Their Vision Before Recruiting Outside Directors
In Part 1 of this 3-part series, we talked about the questions that arise in the need for outside board members for the family-owned business.
Before recruiting an outside board, however, it is important to frame the criteria of the founder/controlling shareholders on the following:
What do we(family) wish for the future of our business: what do we want to preserve, achieve, and avoid?
1)Preserve:
· Values/Culture of the company and founder(s)-what are they?
· Long-term viability of the business-growth plans for the future?
· Wealth to pass onto future generations-how many generations?
· Control of the business to stay within the family - who is “family”?
2) Achieve:
· Growth — a strategic plan for the future competitive position of the business
· Succession of leadership, including the CEO-is there a family member in the queue?
· Long-term community impact
· Retention and rewards for long-term, valuable executives
3) Avoid:
· Competing internal interests
· Ambiguity about succession
· Family members demanding liquidity (that may imperil the business)
· Split shareholder interests
· Forced sale of the business
Though a solid shareholder agreement will cover many of the above items, there is no substitute for having the right mix of outside, independent directors who can help the family members in the preservation and achievement of goals, as well as the avoidance of messy conflicts. Once the above questions are defined, it is time to move to recruit outside directors to help preserve and achieve the above goals of the family business.
In Part 3 (coming next month), we will examine the practical considerations and process for doing just that.
Phyllis J. Campbell is a Family Business Board Consultant with over 40 years of board and executive leadership experience. She has led in both nonprofit and public sectors and now advises family businesses. Passionate about fostering diversity and inclusion, Phyllis focuses on building strong board cultures to support sustainable growth and long-term success.
Connect with Phyllis on LinkedIn.
