Private Company Director

A New Day for Businesses and Boards

Boards are seeking directors who understand the stakeholder perspective.

For owners of private companies, the best returns for the risk undertaken often come from taking into account  the returns for other stakeholders including employees, customers, suppliers and the communities where they  operate. In a sense, it’s a new day for businesses and boards. 

There are solid, time-honored criteria for successful board members. Change is underway, adding to the skills  and experiences sought by private companies in their independent directors. Interestingly, companies seeking  those additional attributes are encountering a large pool of qualified aspirants. 

Timeless criteria for independent directors of private company fiduciary boards include collegiality and the ability to honor the thoughts and feelings of others while introducing a different opinion or a new way of looking at a problem or opportunity.

Boards typically look for a successful record as a CEO or executive leader, preferably with a company of the same size or a little larger in a market or industry with relatable characteristics. They also seek directors who have experienced the difference between the responsibilities of executives to lead the business and those of the board, which is tasked with making sure the business is set up to meet its goals. Among its other roles, the board ensures that capital is appropriately allocated and that there are active processes for leadership development, support, accountability, compensation and succession. 

Often, there are specific skills, experiences or backgrounds required when filling certain board seats. One may be corporate finance, including the evaluation and integration of acquisitions. Systems experience is often sought, including cyber security or e-commerce. The board may also be looking to improve diversity in perspective, experience, geography, age, generation, gender, race or cultural background.

The stakeholder perspective

Increasingly, boards seek directors who understand a stakeholder perspective. Doing well by doing good suggests that returns for shareholders can be produced competitively and reliably by also considering returns for employees, customers, suppliers and communities. As to the environment and all company endeavors, there is a first-order necessity to do no harm. Beyond that, a stakeholder perspective recognizes a company’s self-interest and enlightened responsibility to make a positive impact not only economically, but also socially and environmentally. 

Today, an increasing amount of companies are integrating the mission of doing well by doing good into their business strategies, unifying purpose and action. These companies are seeking out independent directors with experience in implementing ESG principles, which is highly motivating for many would-be board members. One recent instance resulted in 384 applicants for a private company independent director board seat. 

Family businesses are particularly well-suited to a stakeholder perspective. Families existed before their business, and most families want to see their business enterprise prosper for generations. Increasingly, business owners, boards and leaders are doing well by playing a role in making the world a better place.

Date

Rob Sligh is a senior consultant for The Family Business Consulting Group Inc.

Directors Record

Subscribe