Why evaluating boards in Private and Family Businesses makes sense.
Board assessment and evaluation is common place in listed companies and forms part of the corporate governance structure for any Plc.Yet more and more entrepreneur led and family owned businesses are choosing to carry out an evaluation of their top team as part of their own strategic planning process.
Why conduct a board evaluation?
Reviewing the composition and effectiveness of your board, or top team, on a regular basis (every two years) can be regarded simply as an example of strong corporate governance, but is especially valuable at particular stages of an organisation’s development:
As part of a strategic planning process
During periods of intense change
Following a change in leadership or as part of succession planning
In advance of an “event”, such as an exit or capital raising exercise
An effective board functions as a team but, as we all know, the success of a team depends on the efforts and skills of each individual team member. By gathering feedback from all of your board members about their own individual performances as well as the performances of their peers, you’ll get a rare insight into how the culture and dynamics of your full board are impacted by the style and engagement of your individual members.
Peer-to-peer assessment provides your individual board members with an opportunity to reflect on as well as learn from their colleagues about what aspects of their service add value to the board team and what aspects might be strengthened. Participating in the board assessment as the leader of the business can sometimes leaders nervous – yet id does present you with the only real opportunity you have to receive objective feedback on your own performance.
Also, as a leader, you will constantly be considering if you have the right team around you to successfully execute your vison, objectives and strategy. Often leaders will have a “gut feel” about which members of the team are right, who has great potential, what additional skills they need and who is holding the team back – perhaps the business has simply outgrown them now.
Frequently, these thoughts are kept inside the head of the leader and not openly discussed. Leaders often procrastinate over decisions regarding members of their team – often due to personal, emotional or political reasons. This process will help open the door to such discussions.
Conducting an assessment of your board can help provide an independent, objective view of the talent you have in place to achieve your business objectives, together with an assessment of the board’s effectiveness. Answering the following questions can prove insightful….
Is the board functioning effectively? Does the team work well together and are they supportive of each other? How could effectiveness be improved?
Is every member of the team fully aligned with the vision, objectives and strategy of the business?
Do we have the optimum team structure? Are people in the right roles?
Who is high potential and what development or support do they need to ensure continued high performance?
Who is not performing to their best ability? What is the reason? Is it rescuable? If so, how? What happens if it is not?
What skills do we lack around the table? Can they be developed or do we need to bring in fresh talent? Do we access those skills through permanent hires or is there an alternative?
Dealing with sensitivity
Conducting a board evaluation in an entrepreneur led or family owned business can be a very delicate and sensitive process and must be managed accordingly. The process can often bring to the surface deep rooted issues, simmering conflict and place the long standing career, of some individuals, under the spotlight. Using an independent advisor who is highly experienced of managing these difficult issues and situations, with the utmost care and sensitivity, is essential for a successful outcome.
About the Author: David Twiddle is Managing Director of Twiddle & Co., a talent management firm exclusively serving entrepreneur-led and family owned businesses.
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