Linda Mayer has served as an executive or board member with several privately-owned companies. Mayer has a deep understanding of consumer behavior and how to strategize to meet market demand. She leverages this skillset into a successful board service career. “Early in my career, I worked at a family-owned company that also purchased a few other companies. As I assisted with some acquisitions and was familiar with the deals, I was asked to join as a director for these internal boards,” explains Mayer. “In that way, I fell into board service unintentionally and didn’t even know it was an option. It was just a logical extension of my existing job.” She adds, “However, it was a great honor and rewarding to be able to participate at the board level.”
Mentorship also played a part in Mayer’s board journey. “The CEO saw my potential and interest in strategy,” recalls Mayer. “He liked pushing people and challenging people for the benefit of the company. And, I liked being challenged. He must have known that I would appreciate the opportunity to learn how boards operate.”
Mayer recognizes that corporate board service has become popular ever since the recession of 2008. However, she believes that board service may not be the right career move for everyone. “It is about skillset, fit, ability to set strategy, and holistic understanding of business,” explains Mayer.
Mayer also believes that potential board members should know how to ask the right questions, especially when joining a family business. Since her first board appointment, Mayer has served on several family, startup, and private-equity boards. “Every business is unique. And all family businesses are definitely unique with their own dynamics and motivations,” she says. “These motivations influence the business objectives and the role of the board.”
Through her years of experience, Mayer has identified the following questions that potential board members should ask before joining family, startup, or private-equity boards. Mayer recommends proactively asking these and many other questions of the board, key family members, and executives.
What is the ownership structure? And, what is the driving motivation of the company leaders and/or family members?
To succeed in a family business, you need to understand the family members’ objectives and dynamics. “The quickest way to learn this is by asking. They will tell you,” says Mayer. “Members of a family business are generally very honest with their perspectives, goals, and motivations. They feel much more secure than employees in any other business because no one can take their roles away. So, they are often very straightforward.”
Mayer also served as a non-fiduciary advisory board member to a startup. She described it as a “fundamentally different” board experience. “Instead of focusing on family objectives, as a non-fiduciary advisor you don’t have as much influence.” She explains that it is always a good idea to ask the founders about their longer term objectives in a startup.
“The business is personal to the founders. It is not just a job. And in the end, they will do what they want.” Mayer says. “This means that the need to align is even greater. Is it a lifestyle business? If so, you want to know about that.” Mayer values the challenge of both family and startup board positions. “I quickly realized that being accountable to a family objective is different and much more challenging,” she says.
What is the family’s primary goal? Do they care more about legacy or profit?
Does the family company you serve prioritize growth, lifestyle, or legacy? Has their name been on this business for decades or even for generations? “You have to be respectful of the fact that many family businesses cannot imagine a family business being run by a non-family member,” says Mayer. “And, if they are maximizing legacy, as opposed to profits, they may spend a lot of time and energy on things that you would not expect, even sometimes to the detriment of profits.”
In this respect, Mayer finds that private equity businesses and boards are very different from family-owned businesses and boards. “Private equity businesses tend to be more action- and bottom-line-oriented. It is more about meeting the stated goals, boosting the company’s financials, and eventually selling the company,” says Mayer. She believes this is why private equity businesses often prefer to see operational experience among its executives and board members. Operational skills are increasingly valued to guide the CEO, position the company, and to develop strategy. She adds, “I find that generally speaking, family businesses are focused on family first and numbers second. Whereas private equity owned companies tend to be more goals and numbers driven with a focus on shorter timeframes of five to 10 years.”
Which generation is leading the business? What does the succession plan look like? Where is the company headed?
Fundamentally, family businesses are all about the family. They need to spend a lot of time deciding on and grooming future family leaders. “In many family businesses where I served, I spent a significant amount of time thinking about the business, training next generation leaders, and in some cases, training family members who would replace me,” acknowledges Mayer. This role isn’t appropriate for everyone, she explains. “You have to enjoy it for it to be impactful and fulfilling,” Mayer adds. “Sometimes the family members you train are capable and driven, and sometimes they are not.”
Some family businesses are not always about meritocracy. They will focus on the family — its legacy and benefit to its members — first. “In a family-owned company, succession planning and tax planning are key issues that the board has to engage in and understand. Where does the owner want to take a company and what expertise is needed to do that? These are fundamental questions in any family business.”
What is the role and purpose of this specific family board?
How does the family view the role of the board? Is the family open to the board’s advice? Does the family trust that the board members have the family’s best interests in mind? Do they just want a rubber-stamp board, while all decisions are made by the family shareholders? “It is very important to understand whether the company has worked with a board before and whether it values the board’s guidance” explains Mayer. “If you like to help companies achieve certain goals and get from point A to point B, then it is critical to understand what is expected of the board to ensure that it is a good fit.”
Ultimately, serving on family boards can launch a fulfilling board service career. However, by asking these questions before joining as a board member, you can ensure that the particular family board opportunity is right for you.