The Rising Demand for Board Members in Family Businesses
As the current landscape of business shifts faster than ever before, old methods of operation become less sustainable. Family businesses are more susceptible to relying on outdated strategies and therefore have the most to benefit from outside guidance in the form of a board comprised of qualified executives. This realization is sparking greater demand for board members in businesses that once functioned without them.
Why Are More Businesses Looking for Board Guidance?
A big motivation for seeking board guidance is the fact that it’s simply harder to run a business today than it was in the past. Most sectors are tied to increasingly volatile shifts in the economy and see revenue impacted as a result. Technological advancements have accelerated globalization, opening up previously local markets to the entire world and therefore increasing the number of competitors exponentially. Government regulation and changing laws add fuel to the fire, making it more challenging to maintain compliance and grow earnings.
Raising the bar on performance in a more difficult environment requires re-evaluating best practices. Family businesses without any outside influence are prone to operating in a bubble, relying on old standards that need updating for the present day. They realize the best way to learn about and adhere to current best practices is to bring in board members from the outside.
Outside guidance and oversight is especially important during pivotal times for a family business, such as when the organization is preparing for a succession of leadership or to be sold. Either scenario benefits from outside perspectives that can view the business objectively and provide input on how to accomplish either event successfully. Family business owners are unwise to shelter their businesses from outside assistance, especially during significant change.
Who Makes an Effective Board Member?
When considering board members, experience is naturally the first trait to look at. Most board members are either recently retired executives or current executives looking for an extra outlet for their business acumen. Experience in the same industry of the company is a huge plus as it equates to a direct understanding of customers and markets specific to that sector, but it’s not the only possibility. Experience in family or middle market businesses is also beneficial in that it can bring knowledge of best practices that transcend industries. Finding someone with experience in both these buckets is not impossible, but it is rare as the circle of people at that level is very small.
When it comes to personality traits of effective board members, there are many. Leadership qualities cannot be understated as board members play important roles during times of trouble and in recognizing negative executive behavior and preventing it from becoming detrimental to the company. Board members should be comfortable challenging protocol and accepted norms where necessary. To that end, communication is critical. A board member must be able to create channels into the company outside of their relationship to the CEO so they can obtain a full and clear picture of how the organization operates.
A board member with a diverse cultural and professional background is a big asset as well. They are more likely to encourage fresh viewpoints and encourage others to speak up. Homogenous boards invite homogenous thinking, leading to a narrow-minded direction for a company. Having a board full of family members may still be working for some, but it’s no way to get ahead.
How to Gain a Seat on the Board
For those seeking a board position, begin by evaluating why you want to be on a board in the first place. Pure intentions entail having a genuine interest in helping others and providing professional guidance to those who need it, as opposed to viewing a board position as a status symbol. Consider what value you can bring to a company by looking back at your experience. What makes you knowledgeable? Have you guided organizations through mergers, tremendous growth, or times of upheaval? If you’ve never served on a board before, consider aspiring to a board on a smaller company or nonprofit to round out your background.
Next, consider your long-term career and retirement plan. Board membership will require a significant amount of your time each year and a great deal of effort, so it cannot be taken lightly. How often could you feasibly attend board meetings and events or provide guidance through calls and emails? In many cases, you might be slowly stepping back from your current company as you progress into retirement, so you may have the time to put into a board. However, if you’re still putting 50+ hours a week into your company, a board position may not fit into your career plan at this juncture.
Should you be ready for a board, focus on networking by reaching out to influential peers and leaders. Board positions don’t often appear on job boards, and the majority of board members are introduced to their positions through the CEO. Connect with as many business leaders as you can and seek out speaking engagements to share your knowledge and garner the right kind of attention. As you network, find people who will speak on your behalf since those who are already working inside companies can recommend you for board positions as they become available. Being clear about what you’re looking for in the next stage of your career with everyone you meet is the surefire way to stay top of mind at the right time.
Finally, it’s difficult to gain a board seat without knowing what the process typically entails. Board searches are a very discreet and strategic undertaking. A nominating or governance committee usually analyzes the direction of the company and the current board, working out what skill gaps exist and who could fill those missing pieces of the puzzle. Current board members could be asked to search their networks, but connecting with an executive search firm provides a more effective solution. Such firms are typically connected to larger networks and can bring in the true outside expertise necessary. In any event, board members still have resumes scrutinized prior to the interview process. While these resumes vary, the best describe the value a candidate could offer the board at the very top of the page, proving right away why a company would be interested in them.
Board Members in Family Businesses
Whether you’re seeking board members or looking to become one, family businesses have a great deal to benefit from outside perspectives. These voices of experience and integrity provide a guiding light and stabilizing force in an otherwise volatile modern business environment. Putting together the right board is no easy task, but once accomplished, can be the difference between success and failure.
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