Evaluating the Chair of a Family-Owned Company

By Allen Bettis


Chair Evaluation Private Company Governance Family-Owned Company Online Article

Many family business board chairs don’t get enough informed, constructive feedback. They don’t get helpful comments to answer: What are my best strengths and blind spots as a board leader? Are there things I could be doing (or stop doing) that would make board meetings more valuable for the company? How should I develop my chair activities as the company grows? Often this lack of valuable feedback happens because the chair is a highly respected family member for whom critique could be perceived as disrespect. Sometimes, unconstructive criticism is aimed at the chair from family board members who are speaking from a shareholder viewpoint, rather than as a professional director.

Because the chair is in a position to see that board meetings add strategic value to the business, it is important that he or she receives feedback that enables growth in the job. Occasional performance evaluations for the chair, if conducted appropriately, can stimulate learning for the chair and the whole board. Here are three ways that these can be done:

  1. Self-evaluation. The chair can assess her own performance using a key activities checklist, such as the one below. She may then ask for confidential comment from experienced director peers, advisors, or key managers.

  2. A structured conversation with experienced independent directors. These evaluative conversations can be informal follow-ups after board meetings, or a series of more structured conversations starting with shared elements from the self-evaluation and asking for comment.

  3. As part of a full board evaluation. Some more advanced family business boards conduct these using an experienced board advisor who conducts confidential “360” interviews with the directors and key managers. The advisor provides an analysis to the board, answering questions such as: How does our board performance compare with where we need to be for handling the challenges and growth opportunities on our horizon? Including an evaluation of the chair conducted by an outside expert and provided in the context of a board development plan can be extremely helpful to the chair as an individual, and to his or her role in fostering excellent board teamwork.

Creating a Chair’s Performance Checklist

In this example, chair evaluation materials were developed by the board of the “Norton Companies” (a pseudonym), a 100-year-old family-owned food distribution business. In recent years the company had grown (from two to eight business units and from five to twenty family shareholders). To oversee this growth, the company hired a non-family CEO and expanded the board to include expert independent directors.

Using expert resources published by NACD, the chair and independent directors created customized chair evaluation materials that included a brief description of the chair’s role and a list of activities that would demonstrate the chair’s performance in this role. By documenting these things and adding a space to note specific examples of the chair performing each activity, and where the observed performance has been outstanding as well as where there may be weaknesses, the checklist became a valuable tool.

The Norton Companies defined the role of board chair as:  “The manager of the board, providing guidance that enables the board to accomplish its priorities on behalf of the company and the best interests of all shareholders, and, for a professional board like ours which includes highly skilled and independent directors, the chair’s role is primarily one of fostering excellent teamwork that leads to solid decision-making.”

Key activities of the Norton Companies board chair:

  1. Confers with the CEO before each meeting, defines the meeting goals, and drafts the board agenda. The chair regularly confers with the CEO between meetings to foster an effective board-CEO relationship.

  2. Sees that all meeting materials are distributed to the directors in advance. Confers with top management to see that materials are “board friendly,” distilling top messages for board consumption.

  3. Convenes the meeting and facilitates a mutually respectful, congenial discussion to ensure that the meeting goals and strategic business priorities are addressed.

  4. Helps the directors avoid “micro discussions” which focus on small things that are not a good use of the board’s time.

  5. Guides board discussion to clear decisions and directions for the CEO, to be reflected in the meeting minutes.

  6. Communicates with each director individually to understand their perspectives and offers suggestions for how their contributions could be most valuable to the board’s work.

  7. Provides orientation and feedback to new family directors to help them listen and speak as a director rather than simply as a shareholder representative.

  8. Oversees creation of the annual board calendar in consultation with the CEO and approved by the full board.

  9. Facilitates board communication with the shareholders through the annual shareholders meeting and by consultation with the family council president.

  10. Acts as the board ambassador, serving as its public “face” to employees, customers, the wider family, and communities. As ambassador the chair articulates the company’s mission and vision, as well as its commitment to professional governance.

Results: In this example, the chair identified ways to share some of the key activities with one of the independent directors and clarified specific board preparations needed from the CEO. Board meetings became both more productive and shorter, with every director participating in the dialogue. The chair gained greater support and appreciation from the directors and gained more confidence as she improved her skills.

Allen Bettis is President of The Legacy Associates, LLC and is author of the NACD Directors Handbook Series: The Family Business Board, Vols. 1 and 2.