Friday, November 29, 2019

Align Board and Company Goals

           Are the goals of the leadership of your company in alignment?  Does the Board of Directors and Advisors communicate effectively with the C-suite?  Screening and selecting the proper advisors/board of directors is critical in developing a well-balanced leadership team.  
The company does not want a homogenous team of “yes” men/women.  Rather, it is important to have a variety of skill sets and experiences that complement one another.  You are building a “Dream Team” to lead the organization, don’t you want the best players available in each role?  Founders typically have a defined set of skills that led them to start the company in the beginning.  Whether it is subject matter expertise (SME), or finance skills (typically a co-founder with the SME), or simply a desire to fill a specific need. (In which case both SME and finance may need to be hired). The point of the advisors and the board of directors is to fill the gaps in leadership and create a strong team with which to guide the organization.  Having many varied personalities is not always easy to harness though.  Sometimes it can be like trying to herd kittens or trying to get a room full of small children to sit quietly without a distraction.  How does one handle conflict when it arises?
Potential conflicts should be identified and dealt with immediately before they have an effect on the leadership of the organization.  I have found that the earlier a potential conflict can be identified, the more likely a quick resolution.  
In the early 2000s, I was working with a small family-owned company.  The third generation of the family was running the organization, but because they had grown up “in the business”, they had little practical experience with dealing with the problems they were encountering.  Namely, the short-term vision of the previous generation of leaders was now jeopardizing the very existence of the company.  I was asked to come in and guide them through setting up a sustainable operation for future generations.  
After the initial consultation, it was clear that this was going to be a multi-year project, as they not only needed a “quick-fix” to stop the bleeding, but also an education in corporate governance and a plan to pass along the skills to the future generations.  I created a plan that encompassed a buyout of investors that were not a part of the family (stopping the bleeding), and reduced dividends for a period of time to pay for it (That was not a popular decision), and then partnered with SME’s that had the needed skill sets to sustain the company going forward.  One of the requirements for the SME’s was an educational component to bring the family to a conversational level on each subject.  No need to become experts as they planned on continuing the outsource the process, but understanding what is being said will help to keep them out of trouble later on.
Finally, the family needed to create a Board of Advisors and a Board of Directors that would help to guide the C-suite with strategic decisions.  Because it was a small family-owned company, I didn’t want to scare them with a huge board and dozens of advisors, they simply didn’t require that formality.  
We decided on two family members (each representing half of the family as defined by lineage) and one outside director (the “tie-breaker”). Typically when assembling a Board of Directors, major investors should be represented (They were) and outside experts should be brought in as needed.  The larger the organization, the more experts needed.  (Always creating a board with an odd number to avoid a potential stalemate situation)  Additionally, the terms of the board members should be staggered to maintain continuity during a transition. 
The family members were an obvious choice for them, each “side” had a clear leader that none of the others questioned.  The obstacle was that they didn’t necessarily get along with each other.  Taking that into consideration, the third director needed to be a strong leader experienced in conflict resolution.  After interviewing a dozen candidates, they asked me if I would consider the role.  I accepted and worked with them in that capacity for over 10 years.  The advisors consisted of a representative of their legal firm, their CPA, and the owner of a strategic partner company.  These positions were easily filled as the family had good working relationships with all.
The company had weathered the immediate storm and now had a structure that was sustainable, in alignment, and poised to grow for the benefit of future generations.

No comments:

Post a Comment