Directors need to be hands on and involved
As with all companies, governance is only properly effective when those on the board keep vigilant throughout the year as to what is working within the company, what isn’t, what could be improved and so on. Another added layer to a family business board is the fact that non-executive members need to be made to feel as involved and passionate about the business as the family members are – as well as how to be brought into the natural succession process in family businesses.
The line between family and business
As much as non-family board members must be integrated, family members also need to be mindful to separate their personal emotions and family dynamics from the more difficult decisions that a board has to make.
Essentially, family members and non-family members need to work to meet that equilibrium on how to approach the business so that every decision made is from the right amount of commitment and reason.
In order to minimise emotions getting in the way of difficult to make decisions, many family businesses call a meeting between family members prior to the board meeting to make sure that feelings can be aired and opinions made more factual before the board meeting.
How should the family business be benefitting from the board?
In its commitment to the prosperity of the business, there are three key deliverables that the board should focus on:
• Oversight: Ensuring that the business is being run in the best possible way, from strategic, financial and legal points of view.
• Insight: The board members should never be happy with the status quo…if something isn’t working, then it should be analysed as to why, and if it is working, then the board needs to continually make sure every solution is the best possible one.
• Foresight: It’s up to the board to be the implementing force of change, as well as to keep looking for possible risks and opportunities for the business.
Above all else, an effective board works as a unit in all decision-making, enabling swift action on opportunities, as well as well-rounded management of any potential risks.
This article is based on KPMG Family Business and WomenCorporateDirectors (WCD) research and interviews as contained in the joint report “Enduring Across Generations: How Boards Drive Value in Family-Owned Businesses”.
