Nearly every family-owned business leader hopes to pass the torch to a family member when the time comes. Yet, fulfilling that hope is surprisingly difficult. While exact figures may differ from one source to another, there is common agreement that fewer than 30% of family businesses survive into the third generation of family ownership.
Every Family Business Needs an Independent Director
They keep things fresh and fair.
January 27, 2020
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Summary.
A common difficulty in family businesses is a lack of appropriate succession planning. The selection of the next family leader — be it the CEO or the chair of the board — comes with emotional, business, and governance challenges. There’s often pressure to maintain the “family chain” and preserve family values while also evolving the business in order to remain competitive — two goals which can often feel at odds with one another. Ensuring a positive handover to the next generation — in a way that balances family heritage with business evolution — should be central to the purpose of a family company’s board. To strengthen decisions about future leadership, the presence of independent board members, who are neither part of the family nor too close to it, is vital. These directors ideally should not only bring CEO and/or international experience, but also a deep understanding of digital transformations and new technologies. It’s the best way to ensure that the family business can remain competitive for the next generation.