Q&A: Board Succession Strategy
Q: We have three non-family board members in their 70s on our family board. How should we handle moving them on?
A: The composition of the family board is a careful balance between family members & independent voices, and maintaining regular turnover is very important. Often, families will establish a board with some family members, the family lawyer & accountant, and perhaps some other trusted advisors. But without due attention to the board composition, the group can remain static for a period of time, until they suddenly realise it’s time to bring in some fresh people and energy. What is required is a board succession strategy.
This involves analysing the mix of skills, ages, tenures and backgrounds that the board needs now and in the next few years (bearing in mind any anticipated major events the family expects to be dealing with during that period). That should be compared with the current composition, which can help identify any gaps. Open discussions with each board member individually as well as collectively are essential so everyone understands their role on the board, and how long they would like to continue there. People generally find it easy to join boards and committees, but hard to leave them.
While in the corporate and non-profit worlds, a common limit to board tenure is 6-10 years, families are different and terms can and should be longer. Family and ‘corporate’ memory are more important on family boards, and provide essential value and context, especially in times of crisis. That said, a board stacked with a bloc that has been there for 20+ years can be a barrier to necessary strategic renewal.
Usually, board composition falls to the chair. But in family boards, the chair may not have those skills, and it can therefore be helpful to bring in a specialist to assist with a regular review process.
Consider This: Do you track board tenure and skills for your family boards? Have you ever openly discussed board member’s plans to leave the board?
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- How Family Businesses Can Adapt for the Next Generation
- Being fair but not equal: Divvying family business the uncomplicated way
- Succession Planning And The Professional Management Of Family Owned Companies
Here is more on reading on family business succession planning.