It should come as no surprise that family businesses can be more difficult to manage and scale when combining loved ones and business. It’s easy for family members to become relaxed about their duties, allow their personal feelings to affect professionalism, or point the fingers when it comes to business growth.
That’s when hiring an independent director to help lead your family business to success comes into the picture.
More and more family businesses are looking outward for inward help to grow their family businesses. So, what is an independent board member, what are the benefits of implementing one into your strategy, and how do you hire one successfully? Keep reading for the answers to these questions and more.
Benefits of Independent Directors for Family Businesses
As we’ve mentioned, family businesses can fall into ruts from too closely sticking to traditions, poor succession planning, or general mismanagement at the highest level. However, many prosperous family businesses often have a secret to their success – independent board directors.
The inclusion of independent board directors who aren’t tied to the family offers businesses a wide range of advantages that contribute to the long-term success and sustainability of the business. Let’s dive deeper into some of the most crucial benefits of hiring an independent board director.
Independent directors offer family businesses an unbiased perspective. They help leaders make decisions based on the best interests of the business rather than personal or family interests. This impartiality supports family businesses by avoiding conflicts and ensuring the decisions being made align with the company’s strategic goals.
Despite their education, experience, or expertise, family members have the highest level of command in their businesses. Businesses can benefit from diverse professional experience and industry expertise that the family might not otherwise have by hiring an independent director.
That expertise comes in especially handy when independent directors help strategically guide family businesses to success with valuable insights. They are often equipped with industry knowledge, technological tools, and insight on market trends that can help guide family businesses to optimal success by innovating and adapting family business environments.
If all you know is your own family business, you might not understand the risk that could be a threat to your own livelihood. Independent directors help increase your family business’s risk management strategies by identifying and addressing potential risks facing the business, helping you become more resilient.
Independent directors can also act as mediators in family conflicts, using their objectivity to find resolutions that are in the best interest of the business.
Access to New Networks
Again, being involved in just your own family business can limit your access to other viewpoints, experiences, and networks. By bringing on an independent director, your business can tap into a variety of professional networks that can support the family business in collaborations, development, and partnership opportunities.
How to Hire an Independent Director for Your Family Business
Convinced your family business could benefit from an independent director already? Next, let’s cover how to hire an independent director for your family business with practical tips and best practices.
- Define Criteria: Before setting out on your search, clearly define the criteria by which your family business could benefit from an independent board director. Common factors to consider include industry experience, financial expertise, strategic vision, and independence.
- Identify Candidates: Begin your search to identify candidates through industry contacts, executive search firms, professional networks, and industry contacts. You can also conduct your own online search to expand your horizons for candidates with diverse backgrounds and perspectives.
- Evaluate Qualifications: When you’ve narrowed down a few candidates, review their resumes, professional backgrounds, and relevant experience. Then compare these and assess which are the most relevant for the defined criteria for the role.
- Vet Candidates: Fact-check and vet each candidate through thorough reference checks to verify their professional background, reputation, and performance in previous roles.
- Interview Process: Conduct interviews with shortlisted candidates to assess their suitability for the board and the personalities of your family business. The interview is a time to explore their understanding of the company’s industry, challenges, and strategic goals.
- Board Approval: Once you’ve landed on a candidate or group of candidates you’re prepared to move forward with, present the list to the board for approval.
- Offer and Negotiation: Upon board approval, you’ll extend an offer to the selected candidate, outlining expectations, responsibilities, and compensation, with negotiations if needed.
- Onboarding: Facilitate a comprehensive onboarding process to familiarize the new independent director with the company’s operations, culture, and governance structure.
- Regular Evaluation: Regularly evaluate the performance of the independent director against established criteria. Consider re-election or replacement based on performance reviews.
Use these tips and steps as a guide to hire your own independent director, but be sure to tailor them to your family business’s specific needs and governance practices. Even more, it’s crucial to keep up with the compliance of any relevant legal and regulatory requirements of the process, which the right independent director can
Double Iron Consulting: Trusted Independent Directors
Bill Smith, the owner of Double Iron Consulting, lives, eats, and breathes family businesses. He grew up in Birmingham, Alabama, watching his own family lead Royal Cup Coffee and Tea to success.
Eventually taking over the reigns himself and leading the company to a successful handoff to a professional executive team charged with leading the next phase of growth, Bill has a long career of helping businesses reach their full potential.
Today, Bill is using that experience to help other family businesses gain the same level of success by filling the role of an independent director or independent board member.
From family leadership transitions to improving internal systems, leading rebranding initiatives, and expansion, Bill has seen it all. Put his experience and expertise to good use for your family business by scheduling a complimentary strategy call today.