In recent years, many family-owned or controlled companies have done well preparing their late boomers or gen-Xers to play a leadership role in the family business through planning, education and work, write Dennis Jaffe and Keith Whitaker.
Still, next gen members who receive an invitation to join the company's "big board" would do well to consider a number of questions before saying, "I'm game"—questions that college degrees and job experiences may not have answered.
First, ask yourself if you want to serve—and why. Being on the board is not a prize; you have not won a competition or a family honor. Joining the board means that you take responsibility to oversee the business for the sake of all the shareholders, family and non-family.
Second, ask yourself what you hope for by taking this office. Questions to consider are:
Sometimes the answers, if honest, may surprise you.
For example, many adult children take on board service out of a desire to deepen the connection with their parents or to make up for past breaks or conflicts. Does that goal fit with your other goals or the company's needs? Serving on the board may bring you into the family at a time when you want to develop your own identity, and it may take time that detracts from your own needs. Your spouse, for example, may have some thoughts about this step.
You should pose questions not only to yourself, but also to other family members, especially members of the older generation(s) currently serving on the board. What do they hope you will achieve? What are the plans for the future and how do your skills fit into them? These conversations should include your parents, especially if you have parents on the board. Will they remain in service? Indefinitely? Or do they plan to transition you on and then resign?
These may be hard topics to address with a parent. But remember that you are talking not only with your parents but also with a business partner and fellow-leader. Understanding their expectations may be crucial for the board's success—and your own.
Finally, it's crucial to canvas your siblings. If you are the first among them to be considered for board service, do they have expectations for a "turn" at some point? How would such a transition take place? Without a full and ongoing discussion, resentments can build over time, threatening the family and the business.
No one should accept a board position without fully understanding the terms of service. Is there a nomination process? How does it work? Does someone other than your parent have to nominate you? Are there criteria for board membership, besides family membership? What is the director's job description? What are the time and travel commitments? Are there term limits?
One area that is important to share openly as a family is any compensation that comes with board membership. The amounts may be relatively small, but if it comes out years later that you have been paid without your siblings' knowledge, it can lead to surprise and conflict.
A danger that enterprising families face, and which readily raises its head in deliberations around the board, is "branch orientation": the natural inclination of families to focus their energies on the interest of their separate branches. Is the motivation in inviting the next generation to join the board to represent specific family branches?
While natural, this motivation confuses two matters: corporate governance and family governance. The purpose of the corporate board is to hold the management of the company accountable to the shareholders. Its focus should properly be on the company, its leadership and their strategy. It needs to direct the company, not represent the family or its branches. The place to represent the family is in a family council, and if the family doesn't have such a body, now might be the time to explore creating one.
You are likely to find no clear answers to these questions if they have not been asked before. In that case, your questions may initiate an inquiry by the whole family into what they want from the board and how the board should function. With the invitation to serve comes responsibility, and that responsibility begins when you begin to ask these questions. If you do, you are beginning your service wisely and well.