The delegate list for Family Business UK’s annual conference is unique. At their 2024 conference, “Harnessing the power of people”, I spoke to the MD of a chain of funeral homes one minute and the chair of a multinational engineering company the next, all while appreciating the diverse and multi-generational aspects of the UK’s family business community.
We were there to discuss board effectiveness. Sharing insights from our research and client work, we explored what business leaders could do to get even more value from their boards and reviewed the vital role played by focused agendas and impactful board reporting.
As this was the biggest annual gathering of family businesses in the UK, we couldn’t resist doing additional research. We’ve spent the past five years gathering data on board reporting with our board pack assessment tool (developed in partnership with the Chartered Governance Institute UK & Ireland). So, we wanted to find out how the 250+ family businesses in the room saw the quality of their board reporting and how it compared to other companies. Here’s what we learned.
Family business leaders are much more satisfied with their board papers than other leaders. Seven in ten said these papers helped them have more focused and productive conversations. Meanwhile, fewer than three in ten of the wider population felt the same way. Family business directors were also less likely to say that the content of their board papers was too operational (34% vs 69%) or too internally focused (24% vs 61%).
However, this doesn’t necessarily mean family businesses have solved all board reporting issues. A substantial minority (40%) thought their board papers were too backward-looking, and 45% said it was difficult to identify key messages. What’s more, nearly half (44%) of directors surveyed said their board papers needed improvement.
Why are family business directors happier with their board packs than other leaders?
We have a couple of theories.
Perhaps family business directors know their businesses better than other directors. Those who have held operational roles or been shareholders their entire lives, or those who founded their own business, may be less reliant on the board packs for information than traditional directors, who may only engage with a business for a few days each quarter. Family business leaders may be able to tap into a wider range of channels to gather the data they need. They may also find it easier to navigate this information and identify which insights to act on.
It could also be that, due to the complex dynamics of holding a company together across multiple generations, family businesses are more likely to appreciate the importance of paying attention to things like board and management reporting.
For example, in mature family businesses, it’s common for family constitutions to clearly delineate the roles of family member, owner, board director, and management, or to have a family council as well as an owners’ board and a supervisory board.
Some family members may sit in all four camps, and others only in the first two, but they recognize the need to codify what is required from their board papers to keep everyone informed and aligned, and they invest in their ability to deliver it consistently.
Of course, this experience isn’t universal. In many family businesses, these lines blur. Paying attention to governance also doesn’t guarantee that it won’t be dysfunctional. This may explain why so many of the leaders we surveyed felt their reporting could be improved.
How family businesses can improve their board packs
Great board packs are an issue for more than just the board. They shape the analysis, decisions, and actions that determine whether or not a business survives, surfacing crucial issues and giving leaders the tools to address them.
When board packs are overly long, difficult to read, and focused on the wrong priorities, even the best directors with the best intentions can get stuck in the details rather than seeing the big picture. This means opportunities get missed, threats are ignored, and progress stalls. In family businesses, which need to think long-term, this can be especially costly.
So, what does “good” look like? We’ve spent 20 years studying private companies, listed businesses, and non-profits to determine what makes a great set of board papers. We’ve found that, in every environment, it comes down to three issues. Best practice board papers are rich in critical thinking that is communicated effectively and sharply focused on what matters.
- A strong paper starts by clarifying why it was written, how it connects to the company’s wider strategy, and what it’s asking of its readers.
- It’s stringently structured, tackling the tough questions head-on and asking “Why?”, “So what?, and “Now what?” at each stage to ensure the writer considers every angle in their search for insights.
- It’s written in a concise and compelling way, making it easy for directors to read and absorb, so they can extract and act on the key messages.
These are not necessarily skills that report writers have been trained in, whether in family businesses or otherwise. And even when training is provided, it only gets you so far.
That’s why we built Lucia, our AI-powered board and management reporting software. The aim was to make high-quality board reporting consistent and effortless. Lucia acts as a critical friend and editor to writers, helping them sharpen their focus, critical thinking, and communication skills every time they write a report.
Starting with customizable templates built around our trusted QDI Frameworks, Lucia guides you to write clearly, nudges you when you get too detailed, and identifies the things you have left out. The result? Excellent quality board papers that help your board add more value.
