Leadership is not confined to an individual’s set of attributes and skills; leadership can be a process that is shared within a group. It is extremely rare that a single person will have all the attributes necessary to provide leadership in every possible circumstance. Leadership groups are able to depend upon the various abilities of their members to provide the right leadership needed at the right time.
Owning a family business implies leadership no matter what your role in the business or even if you don’t work in the business. Being a member of the owning family group carries the responsibility to provide leadership – not in day-to-day direction of the business but in vision, values and strategy.
The ownership group needs leaders in the form of a chairman of the board and other directors who bring the needs of the business together with the wishes of the owners and the values of the family. The leadership of family directors moves the assets of the family forward in relation to moving the family forward. It has a foot in both arenas—family and business—and needs to have a great deal of understanding about both of those systems. On the family side, the board’s leadership is related more to the values and the goals of the family for the business than on relationships within the family. On the business side, it means translating family goals and values into forms that management can respond to and that represent the best interests of the owners. Management’s job is to meet the goals of the owners.
The chairperson of the board should be a real job and a real leadership challenge. It shouldn’t be used as a means of putting an aging CEO out to pasture. Frequently, family businesses combine the roles of chairman and CEO, but there is wisdom in separating the two responsibilities. For one thing, the CEO already has his or her hands full running the business. A separate individual serving as chairman can give full attention to the leadership of an active board representing the interests of owners in a way that a CEO cannot.
One of the most valuable leadership roles the chairman and the board can play is to build shareholder loyalty, awareness, and cooperation, and to encourage the notion of “patient capital”—that is, family owners’ willingness to leave their funds invested in the company so that long-term business goals can be met.
After the founding generation has passed from leadership of the family and the business, no sibling or cousin is likely to have the same “moral” authority. It requires the commitment of the entire ownership group to provide the full range of leadership necessary to take both the family and the business to the next level.