Learning to Lead the Board
4th February 2015
The majority of family businesses start with an entrepreneurial stage in which the founder and his siblings are used to managing and directing the business. Most of the activity of the business is managed in an operational way, on a day-to-day basis and not with a long term view. After these early stages family businesses start to gain awareness about the need of a governance system clearly different from the management or executive system. Governance is not management, and "governing" is not at all "executing". There are decisions to be taken in an operational-executive mindset -which belong to managers-, and decisions to be taken on a governance rationale -which belong to directors.
So, if the board's mission is to clearly separate the governance function from management, that is to say, to differentiate long term and strategic decisions from day-to-day decisions, the Chairperson´s role is critical in achieving this objective. We could say that the primary role of the Chairperson is to effectively conduct the team of board directors, in fulfilling the mission of the board.
The problem with the board in family businesses is that we have to manage a team of board members which is often composed of some family executives. So, because of the limitations imposed by the family aspects of the composition of boards, the Chairperson must be a family member with authority, accepted by all family members, especially the family executives. Also, it is important for the Chairperson to attract outside talented directors to the board, to gain equilibrium in the team, and reinforce the strategic view over the managerial positions represented by family executives on the board.
In early entrepreneurial stages the Chairperson is usually the founder itself, and in the early and mature sibling stage of the family business the Chairperson tends to be the most experienced executive of the siblings. Thus the executive experience of the Chairperson is an advantage in one sense -managing the business- and a problem to solve in an other sense. When the Chairperson of the board in a family business is the founder itself, or one of the experienced executive siblings, there is a gap to close, a lesson to learn, about governance. The executive experience is not the adequate scenario to learn about governance, but it is an important one.
Therefore, how can the Chairperson of the board in a family business learn to direct a team with non-managerial objectives? What are the values and skills to be learned? How can they learn and acquire them?
- Leadership, courage, initiative
- Patience, flexibility, openness to hear other points of view
- Humility, spirit of service, disposition to be helped and/or to delegate tasks
- Good judgement, wisdom, ability to show sympathy and detachment.
- Restraint from meddling in management´s responsibilities
- Sound strategic knowledge about the future of the business
- Conducting high-performing teams
- Communication and negotiation
Values can be put into practise in many different scenarios during the Chairperson's life, especially before being nominated as a Chairperson of the board, but skills have to be learned in appropriate settings.
Leading committees in the business or in the family, leading boards in associations, business, social or economic institutions can provide valuable experience to gain skills in leading boards. Most of all, being a board member in your own family business or in other businesses and companies is the best way to develop the capacities and skills of a Chairperson.
Moreover, business school programs for advanced management development in which one learns to work in highly skilled teams, following case methods, and sharing with senior board members or high executives, are an excellent resource for board training. These programs moderated and guided by experienced and skilled professors, are -if not real practise - a simulated scenario able to help family members open their minds, gain a strategic perspective of the business, be aware of their strengths and weaknesses, and effectively lead high-performing teams.
Carlos has worked with over 50 family-owned businesses in Europe and Latin America, helping to develop long-term family strategies and protocols. He also serves as an independent Director on several Boards and Family Councils. He founded and is consultant to various Family Business Chapters or Associations in Spain, Chile and Peru, which are linked to the Family Business Network. In addition, he helped to establish Family Business chairs at the University of Oviedo (Spain), Pontificia Universidad Catolica de Chile (Chile) and PAD Business School (Perú).
Find out more at www.en.carlosarbesu.com.