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Report Cards as a Family Business Tool

By Jennifer Pendergast, Ph.D.

For those of you with children – or those who fondly remember the excitement surrounding this “back to school” season – thinking about report cards this time of year will make sense. Looking back from my adult perspective, I can now see the value of report cards in a whole new light. Report cards aren’t just an opportunity to pad your piggy bank with a quarter for each A (I’m sure that number has escalated with inflation), or the reason to run to the mailbox in hopes of grabbing your report card before your parents get to it.

Yes, report cards signal success and failure. But more importantly, they serve as a tool for measuring progress, telling us where we have been, laying out a roadmap for where we need to go and validating our progress along the way.

If you can guess where I’m headed, I’m suggesting that report cards can be valuable outside of a school setting. In the family business arena, they have a number of applications – both for individuals involved as well as groups – for the business, and for the family as well.

It was a family business client, rather than the rush to prepare the kids for school, that started me thinking about report cards. This client called asking for help in expanding the board evaluation process that have in place. The company has evaluated its entire board to ensure it is effective and identify areas for improvement for the past four years. Now, they want to add a component on committee evaluations. When I asked if a problem with the committees had prompted the desire to evaluate them, the governance committee, which oversees the evaluation process, replied that there was no problem. The motivation is to make sure they are doing all they can to ensure the board is effective and identify a roadmap for the future for the board.

Board of Director Report Cards
This proactive use of evaluations to help guide the future is the type of report card that can be the most valuable to the family business. And, it can be useful in multiple settings. Certainly for those businesses that have boards, a board evaluation is an opportunity to make sure you are taking the greatest advantage of the board, using it as a tool to ensure appropriate oversight and as a source for advice and support. The evaluation can also identify questions to consider that would guide the board in the future, such as “What are we trying to accomplish as a board?” and “What should our goals for the future be?” An ongoing evaluation process can also validate areas where the board has improved performance and the goals that have been achieved.

The board evaluation process can be adapted to evaluate the progress and effectiveness of the family council, family office, family meetings, family task forces or committees, and even family education programs. Topics that can be addressed across all settings include:

  • Are the role, responsibilities and goals of the group clear?
  • Are the role, responsibilities and goals appropriate?
  • Is the group fulfilling its responsibilities?
  • Is the meeting process for the group effective?
  • Is the process for selecting membership effective?
  • Does the group make a positive contribution to the organization or family?
  • What should the group’s goals for the future be?

Individual Report Cards
At an individual level, evaluations can be used to determine whether or not family members are effective in their assigned roles in the family council, on the board, etc. Evaluations can be used as an opportunity to identify specific areas for improvement as well as longer-term development opportunities. Taken across a group of individuals, evaluations can ensure that a long-term plan is in place to develop the overall talents of the family to achieve future aspirations.

Because evaluations can be viewed as critical and negative, the process for delivering them and communicating their results needs to be carefully managed. The responses of group evaluations should be gathered by a trusted individual who has a position of authority over the process – the head of the family council or board chair, for example – and responses should be summarized to maintain confidentiality of individual responses. Evaluations of individuals should be kept strictly confidential and results should not be communicated across a broader group.

In delivering results, it is important to balance the constructive criticism aspect with the opportunity to celebrate successes. And, balancing the backward-looking aspect of report cards – evaluating what has happened – with the forward-looking aspect – where can we head from here – is important as well.

So, as we head into another school year, think about opportunities to use a report card as a tool for improvement, celebrating successes and creating a roadmap for the future in your family business.

 

 

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