Veteran family business researcher, adviser and director Joseph Astrachan offers these tips for family business leaders who want to add independent directors to their boards.
1. Develop an in-depth board book.
“This is essentially a dossier on your company, its people, its strategy and the market, including not just customers but competitors. In the process of [creating the board book], much is learned about the company, even for people who have been in it for decades. When you are recruiting board members, you can see if people are going to be committed, because they have to read the thing; and also whether they have an affiliation for your family, your company, and the market that you're in.”
2. Consider whether you should try to get the perfect board members at the outset, or whether you should add new directors immediately—but be prepared to remove them leave quickly if they're not working out. Neither alternative is ideal.
“If you are trying to get the perfect board member, you could be waiting an awfully long time. And if you don't try to find the perfect board member, you could put a real dud on your board.”
3. Really understand the chair role, and have somebody who is capable of being a good chair.
“If you're a family member and you want to be a good chair, understand what that means: in terms of agenda setting, in terms of being in constant contact with management, in terms of managing shareholder relationships and — perhaps the most important role — managing the meetings themselves.”
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