Professionalizing your board

In its current issue, Family Business's sister publication, Directors & Boards, features an article by a pair of executives from search firm Heidrick & Struggles on including independent directors on the board of a family-controlled business.

Most of D&B's readers are directors of public companies or executives at those companies, so the article focused on directors of family-controlled firms that are publicly traded. But many of the points raised are applicable to privately held family firms as well -- even the smaller ones.

The authors -- John Wood, vice chairman and global managing partner of Heidrick's Chief Executive Officer and Board of Directors Practice, and Thames Fulton, a principal with the firm's Chief Executive Officer and Board of Directors Practice -- noted:

Longstanding agendas of different sides of the family -- some that may go back for decades -- can complicate board service, creating the need for a "voice of reason" to counterweight family factionalism and historical bias.

Wood and Fulton point out that, compared with non-family firms, family businesses need independent directors who have "a more nuanced set of behavior and people skills." They recommend two qualities that family companies should look for when interviewing prospective outside directors:

"Deft candor": In addition to empathy and patience in the face of family drama, outside directors should be "super-independent"; they should be unafraid to offer candid opinions about board and management decisions.
Diplomacy: Independent directors should be skilled at bringing together people who have divergent interests (such as factions within the family). These directors should advocate for the company as a whole rather than for any one faction.

The authors note that independent directors in family companies must tread the find line "between being empathetic to a family's long-held beliefs and values and being able to see when they are getting in the way of the company's growth and profitability."

If your company has not yet engaged any independent directors, consider whether two or three individuals with these skills could help your board work its way out of deadlocks.

Professionalizing your board

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