What NEDs can add to family businesses
Elizabeth Bagger is Executive Director at the Institute for Family Business.
That family businesses form the backbone of our economy is no exaggeration. With over 4.5 million FBs large and small across the country we rely on products and services from our nations many family business owners.
What often gets overlooked is just how diverse this sector is in terms of size, sector, geography, no. of generations and the degree of family involvement.
The common traits that many of these businesses share are the passion for their businesses, their strong values, the commitment to their local communities and their employees.
But running and developing such purpose driven, values based successful businesses with a long-term focus takes skill, dedication and commitment. As families and businesses grow, these family firms rely not just on the family as a source of talent and contribution, they also look outside the family circles to ensure that they have people with the right skills to run and govern their businesses.
One of the roles that is often discussed in family business circles is that of the non-executive director. It’s a crucial role in a company’s governance and can be the source of great talent for a private business where the role can be much more ‘hands on’ than in a plc.
It’s a central role and the individuals must be chosen with care whether they are family or not.
With access to key company information and strategic level decision making, most FBs will want to ensure their NEDs are people who truly understand their culture, values and the long-term thinking that often includes more than bottom line results as key strategic goals.
Non-Executive Directors have the potential to add great value to a family business. They can contribute to the family firms success in a number of ways including by bringing an outside perspective to the Board, offer constructive challenge, bring a new set of skills or contacts to the business and by helping to ensure the business is well governed. To a family business, the NEDs can also be very important upholders and promoters of the company’s unique FB culture.
At the IFB we know how important the role of the Board is to a family business, through the relationship it has with its stakeholders including the owners and its impact on the success of the business. That’s why we are extremely pleased to be part of the coalition tasked by BEIS to develop a set of CG principles of large family firms. Principle we believe offer guidance and are helping to promote good and workable governance in private businesses and which we believe still give private the flexibility they need to run their businesses.
The Consultation for The Wates Corporate Governance Principles for Large Private Companies closes on the 7th September 2018.