ARTICLE: Family Business Advisory Board: Why, Who, How much ?!

Independent directors bring discipline, objectivity, new perspectives and fresh thinking to the board of a family-owned company. This can help preserve family relationships and sustain and grow your businesses growth.

Separation of family and business:

The distinction between family matters and business matters is often unclear in family owned companies. This confusion is detrimental to both the family and the business. An independent director can be a pragmatic mediator of company issues. The independent director operates without the baggage of family issues to distract from the need to act in the best interests of the company.

The discipline of formal board meetings where business issues are debated, and decisions made promotes the healthy separation between business and family (and the separation between roles of governance, ownership, management and employee). Importantly, the family dinner table ceases to be a ‘de facto’ business meeting, and board meetings cease to be venues for family disputes. This all makes for a healthier business and family life!

Growth:

As a business grows, so does the need for robust governance. Independent directors bring fresh thinking around managing risks and taking advantage of opportunities. They can ask difficult questions (like, is a family member really the best person to manage a new venture?!), help set strategic goals and make changes to the company’s culture and direction that will help the business grow.

The need for funds to expand the business is often the catalyst for bringing independent directors on to the board of a family company because the bank makes formal governance a requirement for advancing more funds. Lenders take confidence from the presence of independent directors on the board and so are more willing to lend.

Can Family Members Sit on the Board of Directors?

It's common for family owned businesses want to have family members sitting on their Board of Directors. Those who do not play an active role in the day-to-day operations of the business can provide invaluable insight into the family dynamic. However, it’s important that non-family members also be on the board. A mix of family and non-family members delivers a healthy combination of board members who will be able to provide the best possible unbiased guidance to the company. This mix also enables the business to stay close to the family values and vision.

Chairperson:

Where shares in a family company are held by more than one family member, the independent director could usefully also be the chairperson of the board. This is especially so where factionalism exists among board members. An independent chairperson can help protect minority shareholders who are vulnerable to family factionalism that can spill over into company decision-making. The chairperson is also a source of support and guidance for the chief executive or general manager.

Cost:

The remuneration of independent directors for SMEs ($10-$20M t/o) is often no more than $20,000 -$25,000k a year per director. An independent chairman for SMEs ($10-$20M t/o) is often around $50,000k per year.

The benefits can greatly outweigh the cost of bringing this fresh thinking to the governance of a family owned company.

Recruitment:

“An advisory board, made up of outsiders who are not “cronies,” is a good way to push the governance envelope. David Bork, The Little Red Book of Family Business.

Avoid the obvious mates of mates, accountant, lawyer etc. Maintain independence and ensure you cast your net wide. To maximize return, select people with skill sets that support your business growth strategy and align with you family values and principles.

Partner with a trusted adviser that will look to truly understand your business, it's challenges/opportunities, growth strategy, ownership and family dynamics. Selection would be best based on a hypothetical profile that was agreed to with the key stakeholders. Transparency and confidentiality is key to this process.

To help with your financial analysis and by way of example. At 'SME People' the cost would sit at approximately $5,000 - 15,000k per appointment (depending on the depth of the process).

Please feel free to call. I'm more than happy to provide any insights and/or guidance.

Warmest regards and good business.

Anna 😊

027-493-5545

COVID-19 Series: 'Speed Dating' with SME Experts

Introduction

WHAT SPINS MY WHEELS: Future skills needed in the workplace - Deloittes paper

https://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-preparing-tomorrow-workforce-for-4IR-executive-summary.pdf

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Blogs & Testimonials

WHAT SPINS MY WHEELS: Business Advisory Council - keen to support SME productivity & growth - Nov 2018

1.   Future of Work – Business Advisory Council

In November 2018 the Prime Minister’s Business Advisory Council was formed and identified four key areas for attention:

1. Building tomorrows skills. 

   1. How can business practically demonstrate their commitment to ensuring workers in NZ are supported to gain new skills and transition into new jobs as the nature of work changes?

   2. How can business support operationalising micro-crediting and fees-free learning policy?

   3. How can our tertiary institutions support this in a practical way, learning from best practice models overseas?

2. Accelerating our regions

3. Attracting high quality investment

4. Unleashing our SMEs

The Business Advisory Council report (May 2019) analysed the impact of new technology on New Zealand productivity and makes 12 specific recommendations with the intent of providing a tangible call to action for every business and the public sector on how NZ can work together and ensure that every New Zealander shares in the growth and opportunity automation can bring.

 Skills, Retraining and Education

Challenge

Recommendation

Significant numbers of Kiwis need to be retrained and reskilled every year to close the anticipated skills gap and mitigate the risks posed by automation.

New Zealand private and public sector employers need to be at the forefront of this transformation, adopting impactful and best-practice retraining strategies.

1. Kiwi employers should pledge to double their investment in annual employee training, re-training and upskilling and publicly report on this investment as a credible signal of leadership in ensuring Kiwis are well prepared for the Future of Work.

2. Board directors should ask the following of their organisations:

   • What is the organisation’s strategy to at least double the rate of real productivity growth using automation technologies?

   • What is the organisation’s human capital strategy to train, retrain, upskill and empower its people to thrive in the Future of Work?

   • How will the organisation change or enhance its culture, behaviours and operating models to ensure it delivers the benefits of automation?

The Future of Work quickly becomes the Future of Education, and New Zealand needs to deliver scalable and effective ways to teach the key competencies demanded by future labour markets; cognitive skills, social and emotional skills and most significantly, technological skills.

The education system, including content and delivery methods, needs recreating to prioritise training in Future of Work skills, specifically technology skills.

1. A national digital and technology curriculum should be developed and made compulsory, at appropriate levels in the education system.

2. A “National Digital Certificate” should be created as a scalable way for businesses to retrain employees in the technology skills needed for most future roles.

A scalable mechanism is needed to encourage and require Kiwis to take personal responsibility to reskill throughout their lives. This will become just as important as saving for retirement.

5. A “KiwiSaver for Skills” should be established by creating citizen directed Lifetime Learning Accounts for individuals to tap into throughout their careers to acquire new skills or pursue higher education.

 Targeted SME and Sector “Surge Support”

Challenge

Recommendations

SMEs and sectors that provide New Zealand with a comparative advantage hold the key to harnessing the benefits of automation by solving a large part of our productivity problem.

Despite SMEs making up 97% of Kiwi businesses, there is no Provincial Growth Fund equivalent for SMEs and many struggle to scale and adopt the technology needed to supercharge their businesses.

There is a strong correlation between SMEs that use three or more Apps to run their businesses and 30% more profitability.

11. High-performing, or high-potential sectors (which have self-selected) should be surged with support and targeted investment and incentives to achieve scale through automation (for example, accelerated depreciation on innovative technology assets, R&D tax credits).

12. A “SME in a Box” scheme should be created, which outlines clear, user friendly steps towards greater productivity in SMEs, including:

–  Encouraging and specifically recommending App and technology use through loans, grants or investment to enable adoption and associated training.

–  Partnering with book-keepers, banks and other service providers to SMEs as a vehicle to roll-out this scheme.

ARTICLE: When your SME business grows up OR your ready to take step back: Appointing a General Manager

When a small/medium business is going from strength to strength, evolving as it grows, the business owner must also evolve to keep up.

They might be strong in product knowledge, operations and/or sales and identifying opportunities within their market. But, to keep up with the demands of a larger business, the SME business owner needs to also think about staff management, financial management, marketing and sales management, and systems development - areas which may sit outside their wheelhouse. 

 If your business is currently going through this and you recognise that you're being stretched beyond capacity, a possible course of action is to consider appointing a General Manager. 

 It's such a critical position that the recruitment of the first GM will probably be the most challenging in the history of the business.

Even with capable, high-quality candidates, it is unreasonable to expect that the appointment of a GM will immediately allow the SME business owner to step away from the business. You will need to invest time, knowledge and energy into this person to eliminate the risk of them not working out and causing disruption.

 To avoid these pitfalls when the time comes, here are some of the most effective ways you can ensure you recruit a valuable GM:

1. Recruit from within - Consider if an existing manager could make the transition into the GM role. Consider potential and whether some education and mentoring could bridge a gap in knowledge.

2. Carefully scope the role. Create a job description with the help of a trusted adviser that understands SMEs and their unique dynamics - Document the role, responsibilities and performance measures.

3. Update the Organisation Chart - show the new GM position reporting to the MD/Founding Owner and carefully consider who will report to the GM. Consider how you will communicate this with your lead team and the timing of it.

4. Consider recruiting the new GM into a manager role first (in the field of their greatest strength) with a plan to promote them to GM after 1-2 years. This will provide a ‘trial period’ before fully handing over the ‘keys’ to the business.

5. Invest time in coaching and integrating the GM to close any ‘gaps’ in knowledge, experience or skills, and seek comprehensive feedback on how the GM is handling the role and aligning with the MD/Founding Owner. Structured meetings with a mutual party (e.g. your trusted adviser) can often create more open and honest feedback resulting in a more seamless transition.

If this is where you are at, and you'd like guidance from someone who has led many businesses through this same transition, I'd love to offer my assistance.

Recent candidate feedback

“I appreciate your straight-forward, honest, “no surprises” approach. ”

— Stuart Kagan - General Manager

“Finding a new job can be a stressful experience. However, Anna helped me get a job within 2 weeks of our first consultation. Anna genuinely concerned about understanding my personality, background, experiences, specific circumstances and needs, in which these information allow her to match me with the ideal roles and organizations quickly. Throughout the recruitment process, Anna was being so supportive and I was always well informed regarding the recruitment situation. Her after hire support and follow ups certainly differentiates her service and making her unique from other recruiters. I would recommend Anna to anyone in need of a new career movement. Thanks Anna!”

— Christy Yau - Sales & Marketing Support

“Anna is an exceptional recruiter with an innovative approach, a refreshing change from the traditional recruitment style. She spend great time getting to know not only my career objectives, values, goals and working style, but myself personally to ensure the company and I were the best fit on all levels. Greatly appreciated, thank you Anna”

— Jessica Bell - Key Account Manager

“I would like to also provide you with positive feedback. From my experience over the previous couple of months, I have found that it is rare within the recruitment industry to engage with a recruitment agent who will actually take their time to understand the candidate. I thank you for taking the opportunity to listen and understand my requirements in depth. There are only a select few who demonstrate these qualities - a great way to retain client’s long term, by recommending the right candidates who are the right fit and not just an easy sale.”

— Stuart Hall - candidate of SME Recruit

Recent client testimonial:

“Like many family SME’s our business doesn’t operate an HR department or even and full time HR resource, however we still face the same challenges of managing our resources, and in our situation planning for family succession.
Anna was highly recommended to us as a expert who could assist us in developing our strategy. Anna very quickly understood our business, what we were trying to achieve and identified some of the challenges we faced. Through Anna’s knowledge and guidance we have been able to develop a future succession plan while ensuring the business is not distracted from it’s core day to day operations. As GM of the business it has been great to draw on Anna’s significant external expertise to help me develop a clear strategy ensuring the right approach to succession has been developed for our business.
I found Anna very approachable , professional and very easy to deal with . Anna will continue to be part of our succession journey as I will be regularly drawing on her expertise and guidance.
”

— Simon Toneycliffe General Manager Whitehaven Wine Co

“Anna takes a unique approach to the recruitment process. SME Recruit felt like an extension of our business as Anna takes the time to really understand your business, the role and the type of candidates that would genuinely fit the business and the culture. We recently placed a senior role through SME Recruit and were hugely impressed by the level of professionalism and her communication. It was an important role to our future growth so we took our time. Anna was hugely patient and positively challenged our thinking throughout the process and presented a fantastic range of candidates. I would definitely recommend Anna and SME Recruit.”

— Mike Button - Sales & Marketing Manager - RLB Packaging & Strapping

“After a series of amazing recruitment fails of my own – Anna Freeman @ SME recruit was recommended to me.
We had a tight time frame, and a very specialized candidate we were seeking. Anna gave me lots of options around the process and this worked well for our business.
Anna made things happen quickly and we have secured a great employee. I was so happy that I used her service again straight away.
In the future, if we have any other openings we would use Anna as of right. I was particularly pleased with her professionalism and level of communication.

”

— Jeremy Scott CPS and Ashley & Co

“Anna has a carved out a niche service for SMEs looking for a more personalised approach to recruitment. She takes the time to get to understand your business, culture and resourcing needs whilst unafraid to challenge your current thinking and processes. I would strongly recommend her to any small business looking for a fresh and more economical approach to recruitment.”

— Matt Vyle - Director & General Manager - Unison

“As the owner of an SME and ‘not knowing what you don’t know’ I can’t speak highly enough of Anna’s ability to fully understand our business and establish exactly what General Manager would be the right fit for us. I always felt Anna had our best interests at the heart of the recruitment process and I would highly recommend SME Recruit to anyone who is really serious about making the BEST recruit for their business – A+++!”

— Richard Crum - Owner Founder - Chilltech

“The recruitment process with SME Recruit was seamless end to end. Anna really gets the challenges faced by smaller businesses and is able to apply her years of experience in the industry to get the right result every time. Her pragmatic approach to problem solving was refreshing and the expert advice made the recruitment process easy and enjoyable.”

— Gray Borrell - General Manager at Novii

“I worked with Anna and SME Recruit for the hiring of an Australasian Sales Manager. Anna’s campaign with us was an absolute success, and we are extremely happy with the team member we have coming on board.
The position is one that will be hugely influential to our business growth over the next 5 years, and being a young SME with a young team, it’s never easy to attract top people from the industry. Anna not only took the time to ensure that she fully understood the type of candidate we were looking for, but also ensured we were portraying our business in an honest, but appealing way to the candidates.
I enjoyed the process every step of the way.
I will definitely be using Anna and SME Recruit again, and recommend anyone else to do so.”

— Ryan Kamins - Director and CEO - CleanPaleo