Leaving Your Comfort Zone: Adding Independent Directors To Your Board
Can You Plan an Effective Selection and Induction?
As the first step, think about the profile of people that would complement your skills. You can develop a Board Skills Matrix and list the qualities, qualifications, and talents which are needed to implement your strategic roadmap. People that you know and trust within your business community are a great resource. You can first look there to identify ideal candidates. You can also work with an executive search firm to propose people who will add value to your business.
While working on identifying candidates, it is also wise to consider what information they need to know about your business to be able to add real value in your board process. The position of your business as of today, competition, and future trends in the market are key information to help them understand your company and where you are heading. Creating a Board Prospectus is a useful tool to collect the information, which you can share with prospective board members or those who may share candidates with you.
Is it Important for You?
A strong board of directors can help guide the direction your business should go and what actions should be taken to get there. This is indispensable regardless if you would like to sell your business or transfer it to the next generation. If the mechanism that knows how to keep your business profitable is “you” instead of a board of directors, then you are also limiting the value proposition of your business — anyone who is interested in buying your business, should actually buy “you” and not the business. However, your board of directors will help your business incorporate your valuable competitive knowledge, which is the key to sustainability of the distinguishing performance that you have achieved.
In summary, many family business owners hesitate to build a board of directors with independent members because of their fear of outside control or advice that conflicts with their way of operating. We have found, however, that the voices of independent directors supplement those close to the business and provide an objectivity that typically no one in the family or in the business can provide. In addition, the presence of a board increases the value of the business both of current owners and for potential buyers should that be the ultimate goal.
Besides being an international associate at AFBG, Burak is the Managing Director of Koçer Consult, a boutique consultancy firm exclusively focusing on corporate governance and governance services for families in business. ( view bio )