Adding Nonfamily to Your Board

Joining The Team

Any person asked to join a family business's board should be concerned about protecting the future success of the business and keeping the family intact, says Hawkes.

"Because it's important to select someone who understands the spirit and the mission of the business, choosing the right person or people for a board becomes more art than science," says Zaudtke.

Before casting the net for potential board members, it's important to draw up a "job" description. "Each company's requirements will be different," says Hawkes. Some companies might want to shore up their weak areas--like inviting someone with broad knowledge of how technological advances in the 21st century will impact the business's industry. Others might want a person with business experience in global markets.

Hawkes theorizes that after the job description is developed, the names of people who fit the description will begin to surface. "If the [company's] lawyer, accountant or business advisor is selected, that person must change hats when they go into the board room," says Hawkes.

Choosing the CEO of another family business to serve on your board is not mandatory, "but it certainly is helpful, especially if the board is involved in succession issues and the outside board member has already been through the process," says Zaudtke.

On paper, a great case can be built for outside board members. "But unless the family business's CEO treats these members as the important investments they are and shares information needed to understand the business, outside board members are of little value," warns Zaudtke. In an effort to keep them up to date on the industry, Lee provides each of his outsiders with a subscription to Automotive News and has managers present reports for them at each meeting.

How one makes use of an outsider depends, of course, on the person's skills, knowledge, connections, and the needs of the business. The outsiders can be used for practical matters, such as chairing the compensation committee, "which removes the possible friction of one family member deciding the salary of another," says Hawkes. And they can be most helpful with strategic planning (succession planning and beyond) and revealing trends and business insights that will affect the family business.

Lee couldn't be happier with his decision to bring in outside board members. "The six people on my board are some of the brightest, most respected and most trustworthy people I've ever known," he says. "They've provided me with guidance for the last four years, and I know they will continue to do that for my younger partners."

Contact Sources

Cloudhawk Inc., (207) 871-7055,

KPMG Family Wealth Institute, (612) 305-5686,

Lee Auto Malls, 200 Main St., Westbrook, ME 04092, (207) 856-6685

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This article was originally published in the December 1997 print edition of Entrepreneur with the headline: Boarding Call.

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