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Recap from Breakfast Series Session One

Posted on Thursday, October 8th, 2020

What I learned from the Family Business Breakfast Series Session One

By Dan BeenkenStock family advisory board

What I learned:

As the facilitator for our annual Breakfast Series, I have a front row seat to our panelists and their expertise.  I also have the benefit of knowing our audience and their interests.  So I feel pretty lucky to be able to combine those elements as I broaden my own knowledge base in the family business environment.  

Our last session on September 18th focused on advisory boards.  I went in to it knowing that a few of our members have high functioning advisory boards, many of our members have no such group at all, and a few fall in between with varying levels of performance.

In no particular order, here is my summary of what I took away:

  1. Harmony  - when your family is experiencing some turbulence, a good, INDEPENDENT advisory board can help bring things together.  They can provide an objective view point, take the hit for the CEO, and be used as the excuse for bringing unwanted change to your other family members.  “ Well, I ran this by the Advisory Board, and they suggest we go for it……”  (Especially helpful when you are trying to get the rest of the family to move along with your decision.  Having the Advisory Board on your side always helps) 

  2. Accountability – The hardest thing to do in life is often to hold yourself accountable.  I am not suggesting that your Advisory Board becomes the new boss you never had and don’t want.  The biggest push back I hear on Advisory Boards is that CEO’s don’t want someone telling them what to do.  I completely agree.  I see the accountability a board can provide as a kinder, softer, gentler type.  It’s a bit like a gentle ocean alarm clock sound rather than a 2 x 4 upside the head to wake you up in the morning.  They can’t fire you, but they can buzz in your ear a little – and often times that’s what we need.

  3. Pay – “How much should I pay my board members” is a popular question.  The rule of them I agree with and often see is to take your CEO’s pay, divide that by 250 (number of working days in a year, roughly) and you have your CEO’s daily wage.  Use that as a baseline for paying your advisory members.

  4. Board members are there to “See that the firm is well run, not to run the firm”

  5. Transition Planners – An Advisory Board is a great wheel greaser for succession planning from one generation to the next.  Their outside, independent nature allows them to bring up the tough subjects – and Succession Planning is always at the top of that list.

  6. “Dear Board Member” - Each shareholder member is required to write a letter to the board at the end of every year – thanking them for their service and offering guidance on what issues/opportunities they would like to see the board focus on in the next year.  What a great idea!

  7. Prep Your Board! – Don’t just have them show up at the local watering hole to have a happy hour with them.  Show them you are serious by preparing an agenda, sending out financial information, and giving them a summary of the last quarter, or 6 months, or whatever the period might be between meetings.  Give them something in advance so they can come ready to rock.

  8. No paid service providers – An Advisory Board isn’t the place for your CPA, attorney, banker, etc.  Those are the most biased folks you can pick.  The last thing they are going to do is disagree with your ideas.  

  9. Term limits – Put some term limits in place so you can keep your board stocked with fresh perspectives.  And so you don’t have to have any awkward moments firing a board member you are sick of (or the other way around).

  10. Be a board member – Put yourself out there and look for opportunities to serve on another business’s board – especially a family business.  See how others do it, steal some of their family planning ideas, and maybe make a little side cash at the same time!