In the United States and around the world, the pressure on boards of directors to professionalize and significantly enhance their performance has been extreme – with regulators, capital markets, and the public demanding more effective controls, and global competition requiring increased strategic guidance.
Family-controlled companies, whether privately held or publicly traded, have always struggled with board design and process. There are few resources specifically targeted at the particular dilemmas of directors in family businesses: appropriate representation of concentrated ownership, role clarification of family and independent directors, oversight of senior family and non-family executives, the group process of family/independent boards, and succession planning.
For that reason we have created an integrated assessment and advising program for family business boards. While each program is tailored to the situation of the individual client, the LGA Board Development Process typically included four components:
- A comprehensive assessment of the functioning, structure, membership, compliance with standards and requirements, leadership, and process of the current board of directors (a Governance Audit®)
- Review and redesign of the director selection/recruitment procedures
- Board 360˚ Assessment and developmental coaching for the Chair and others in board leadership roles
- Education for shareholders concerning board roles and shareholder rights and responsibilities
The Governance Audit, like the Continuity Audit, is based on interviews of all participants and key stakeholders, review of records and policy documents, the use of LGA-designed assessment tools, and input from other professionals who provide services to the board. It usually requires 3-6 months of data gathering and diagnosis and a feedback retreat with the Board. Our team has also adapted our Board assessment and development tools to diagnose the governance requirements of Family Offices and Foundations. Our goal is to facilitate the development of exemplary directors/officers in these two types of organizations.
LGA has also developed a Board Jumpstart initiative to help build the family shareholder’s capacity to work effectively with independent Directors by modeling from the start constructive strategic engagement.