In the world of private businesses, governance is often the cornerstone of growth and transformation.
However, it’s no secret that many governance relationships are challenging. Misunderstandings, misaligned expectations, and egos can derail even the most promising partnerships.
For Founders and CEOs, they can feel themselves to be in a delicate position of balancing their vision with the expectations of the owners. For owners, they can be frustrated by what appears to be a reluctance amongst the Executive Team to accept input and use the Non-Executive Director resource to help improve company performance.
This tension is real.
Yet it can be successfully managed through a combination of a robust process based on independence, data and measurable action plans; plus, a shared attitude of openness, and interactions based on emotional intelligence. A commitment here can see these relationships can become collaborations that unlock a company’s true potential.
After all, there is a critical truth to remember: everyone—owners (Family Office, Private Equity), board members, and the management team—share the same ultimate goal: improved company performance.
The Tension: Founder Vision Meets External Governance Influence
In many investor-backed businesses, the management team has spent years developing and executing a strategy to grow the company. This strategy is grounded in experience, deep market knowledge, and a clear understanding of the business model.
When non-executive directors (NEDs) are introduced – by the owners – they are expected to offer oversight, guidance, and access to networks. While these individuals are experienced, they may lack deep knowledge of the company’s market, culture, and strategy.
For founders, this situation can feel destabilizing.
They’ve relinquished some control over their company, and now they’re faced with external voices that may challenge their established strategies. Comments or suggestions from the new directors may seem misaligned or overly theoretical, sparking frustration and defensiveness.
From the perspective of the owners, however, the introduction of these directors is essential. They expect the NEC and NED to bring independent oversight, diverse experience, and a valuable network to accelerate the company’s growth. For the owners, the goal isn’t to undermine the management team but to provide the governance structure necessary to maximize the asset’s value.
And of course, this is the normal model. Often the owners have many assets, they know this approach works and they expect it to create value.
So, how can these differing perspectives and emotions be reconciled?
The Key: A Structured Process of Discovery, Alignment & On-going Review
Step 1 } Discovery
The independent gathering of data is usually fundamental but often overlooked.
This Discovery phase can take many forms. Individual Assessments, Stakeholder Interviews, Board Shadowing, the use of Emotional Intelligence tools and other data-gathering techniques creates a foundation from which a way forward is created.
Too often this vital relationship framework step is missed.
When done well it unlocks invaluable insight for the relationship by revealing perspectives, hopes and fears, and expectations. With this information, a framework can be created about ways of working which will please everyone.
Step 2 } Alignment
This Discovery phase provides an essential foundation to an open and collaborative relationship. Next all parties must consciously and actively make the decision to commit to building on this understanding by finding alignment:
Acknowledge and Align on Shared Goals
At the heart of every governance structure is a shared purpose: improving company performance. But in each case best practise is to start by agreeing and documenting what has driven the company’s success to date.
Reinforce the Core Strategy
Begin by clearly documenting the strategy that has driven the company’s success. This should include:
- Growth Metrics: Use data to demonstrate how the strategy has delivered measurable results (e.g., revenue growth, market share, customer retention).
- Market Validation: Highlight evidence of product-market fit, customer loyalty, or competitive advantage.
Sharing this information builds consensus and ensures that the full Board has a clear understanding of the foundation on which the business is built.
Use Data to Anchor Conversations
With agreement about the success story to date, move on to agree and align around the business objectives and plans.
- Future Roadmap: Lay out the next phase of the strategy, showing how it aligns with the company’s long-term goals.
But don’t stop there. Engage the group in agreeing Board objectives. Define roles and responsibilities. Agree accountabilities and measurements. Discuss and codify ways of working.
Leverage the Board’s Governance Role
And then use the board’s governance structure to maintain strategic alignment.
- Schedule regular strategy reviews where the entire board, can assess progress and discuss future plans. These ensure that everyone has a clear understanding of the company’s direction and performance status.
- And within these sessions facilitate open discussions that include both the management team and the NEDs, ensuring all perspectives are considered.
Step 3 } Ongoing Review
With objectives defined and measures agreed for both the business and the functioning of the Board alignment is achieved around the direction of travel and the goals. That said, ongoing review of performance is important.
Facilitate Open Communication
The relationship between the CEO, owners, and board members thrives on transparency. This is an actual phenomenon in that people can demonstrate transparency by sharing data and thinking. It is also perceptual in that members of the Board can feel excluded or uninformed even though this was not the intent of the other Board members.
Create a Measurable Feedback Loop
A periodic measurement can help here – an independent exercise recording performance on agreed measures to ensure that the team is on track. This data can then stimulate:
- Structured feedback loops that encourage constructive criticism and refinement.
- Active listening to bridge gaps in understanding between directors and management.
The underlying observation here is that data helps. It can provide a sense of progress; it can highlight gaps. And importantly, it can be the basis of open dialogue by providing neutral inputs upon which all parties can voice their concerns and ideas without fear of judgment.
Leverage Emotional Intelligence
Of course, the dynamics between a founder, owners and NEDs, are complex and multifaceted. Here, best practise emphasizes the importance of Emotional Intelligence in navigating these relationships.
People who better perceive, understand and manage emotions in themselves and others are more likely to succeed. Emotional Intelligence is a skill that can be developed. It can also be measured and used as an input into the functioning of a Team working together.
Tools such as the Genos Emotional Intelligence Model can be deployed within the Board group to enhance self-awareness, leadership and empathy. And most specifically this type of framework can help identify a few key behaviors that can be measured over time alongside the other ways of working metrics.
Focus on Practical, Measurable Action Plans
Naturally, in this on-going review phase the guiding principle is that the governance is only as effective as the actions it drives.
The mission is performance improvement and so the right metrics are those which help the group function most effectively, which stimulate positive ways of working that contribute to business performance.
This means that the emphasis throughout is on crafting actionable plans that are both practical and measurable. This ensures that tangible outcomes remain the focus.
Naturally, in this on-going review phase the guiding principle is that the governance is only as effective as the actions it drives.
The mission is performance improvement and so the right metrics are those which help the group function most effectively, which stimulate positive ways of working that contribute to business performance.
This means that the emphasis throughout is on crafting actionable plans that are both practical and measurable. This ensures that tangible outcomes remain the focus.
From Friction to Synergy: Better Together
A structured process of Discovery, Alignment and On-going review builds collaboration. By working together, CEOs, board members, and owners can turn potential friction into a powerful synergy that drives growth and creates value.
While governance relationships are rarely easy, they hold the potential to unlock extraordinary outcomes when approached with collaboration, openness, and a focus on results.
These relationships are too often left to develop organically when a more structured process could more deliberately create momentum. Success is about building alignment, harnessing collective expertise, and staying focused on what truly matters – company performance.
