25 November, 2024
Developing Board Work in Family-Owned Businesses
The boards of the best-performing companies function as high-performing teams where the skills and attributes of individual members complement and support each other. Evaluating the competencies of board members becomes a critical topic when considering the company's future in contexts such as internationalization, business transformation, or generational shifts. External board members enhance professionalism and strengthen stakeholder trust in the company.
In addition to market success, many owners today emphasize risk management and leveraging future opportunities more than before. A goal-oriented approach to board work and governance aligned with corporate governance principles are fundamental pillars of professional and effective board work. Regular evaluation of the board's composition and activities ensures that the company's performance meets the expectations of owners and investors alike.
These requirements for developing board work have been reflected in increased demand for AIMS International Finland’s board services. Many companies need a partner that provides insight, experience, and concrete tools. Over the years, we have supported numerous companies in enhancing their board work, always taking into account the specific needs of each organization. It has been rewarding to witness the progress of many boards up close, one example being UKI Arkkitehdit Oy.
UKI Arkkitehdit, founded in Oulu in 1958, is one of Finland's leading architectural firms. Over the past decade, the company has nearly tripled its revenue, renewing its management structures to enable growth. The firm's internal commitment and family business values remain integral to its operations. Serving clients across Finland and internationally, the company has offices in Oulu, Jyväskylä, Helsinki, and Rovaniemi. Over its six decades, UKI Arkkitehdit has contributed to hundreds of fascinating and demanding projects.
The UKI Arkkitehdit board and AIMS International Finland collaboratively explored which competencies would best support the company's continued success. The guiding idea was that growth requires a diverse set of skills and the ability to achieve strategic goals. A board evaluation was undertaken to evaluate and understand the future competency needs of the board, taking into account the company’s strategy and developmental direction.
During the evaluation, various working methods were used to assess the current state and existing expertise of the board while identifying future needs. This process allowed participants to express their views on the company and their roles. The evaluation supported the board in decision-making regarding composition, skill development, and shareholder value growth. As a result, AIMS International Finland created new board member profiles to complement the existing team and conducted a targeted search for new members to broaden and sharpen the board's expertise.
Mikko Heikkinen, Chairman of the Board at UKI Arkkitehdit, reflects: “We began developing our board work 20 years ago. A strong board is essential for a company to succeed in the future and address the challenges it faces. Board work must be continuous, and success is built on collaboration. Working with AIMS International Finland has further supported the development of our board, directly contributing to increased shareholder value.”
When selecting board members, it is crucial to consider the attributes and expertise of individuals to ensure they complement and support one another effectively. External board members can bring several benefits to the board, including:
- Objectivity and impartiality: An external perspective that aids in avoiding internal conflicts and emotional decision-making.
- Specialized expertise: Unique skills and knowledge that enhance the board's capabilities.
- Fresh perspectives: Innovative ideas and adaptability to changing market conditions.
- Networking opportunities: Access to broader networks, opening doors to new business opportunities, partnerships, or resources.
- Legitimacy in governance: Increased stakeholder confidence in the company's governance and leadership.
- Enhanced risk management: The ability to identify and manage risks without emotional attachments to the company.
A board evaluation should be tailored to suit the company and its circumstances. It is essential to plan what the evaluation aims to achieve and identify its key focus areas, followed by selecting suitable methods for the process. Beyond defining future competency needs, board evaluation can also, for instance, examine the working relationship between the CEO and the chairman.
For many companies, achieving strategic goals requires a holistic shift in management decision-making, encompassing both board and executive team collaboration. Continuous evaluation and development of the board's activities are essential pillars of board work and also promote adherence to good governance practices.