There is a particular moment that comes up surprisingly often in conversations with founders.
The business has grown. Sometimes it has grown considerably. Turnover has increased, the number of employees has multiplied, new markets have opened up and decisions that once sat comfortably with one or two people now carry consequences for hundreds of others.
And yet, when we talk about the board, the description is often remarkably similar to the one they would have given me five or ten years earlier.
The same people are around the table. The same relationships exist. The same conversations take place. There is often a great deal of trust, history and mutual understanding between them.
None of which is necessarily a problem.
Until it is.
What interests me is that the question of whether a board has kept pace with the business rarely arises when everything is going well. It tends to emerge slightly later, usually after something has exposed a gap. A major acquisition. A difficult trading period. A succession discussion. A significant investment decision. Perhaps the arrival of a new chief executive.
Someone eventually says, usually rather quietly, “I’m not sure the board is giving us what we need anymore.”
That observation can be uncomfortable because it is rarely a criticism of the people involved. In many family businesses, the board has been built around trust rather than design. People have been appointed because they know the family, understand the history, have been alongside the founder for years or have earned a particular confidence.
Those things matter enormously.
The difficulty is that a business can outgrow the circumstances in which its board was originally formed.
Growth changes the questions
When a founder is running a business that turns over £20 million, the board can feel almost incidental. The founder may know most of the important customers, understand the operation instinctively and have a detailed grasp of the numbers.
At £100 million, the business may be fundamentally different.
There may be several divisions, an international footprint, a much larger workforce, more sophisticated financing arrangements and a management team making decisions in areas the founder no longer sees every day. The family may have grown too, with different generations holding different views about risk, growth, dividends and the future ownership of the business.
The board is then being asked to do a different job, whether anyone has formally acknowledged it or not.
This is where the instinctive response is often to appoint someone new.
That instinct is understandable. If the business has developed, surely it needs more experience around the table.
But the appointment itself is rarely the difficult part.
The more interesting question is what the business actually needs from another person sitting around that table.
I have seen businesses begin a search for a non-executive director with a fairly broad description of what they are looking for: someone with board experience, commercial judgement, perhaps experience of a larger organisation, ideally someone who has seen growth or international expansion.
Those descriptions are not wrong, but they can disguise a more important conversation.
What is the board currently unable to do that the business now needs it to do?
Sometimes the answer is strategic challenge. Sometimes it is greater financial discipline. Sometimes it is succession. Sometimes it is simply having someone in the room who has no emotional history with the business and can ask the question everyone else has been thinking but nobody has quite articulated.
And sometimes the answer is less comfortable.
The board may have become too close to the founder.
A board can remain highly functional for years while quietly becoming less relevant to the business it is supposed to govern.
That is particularly easy to overlook in a family business because relationships are often one of its greatest strengths.
The founder may have worked with the finance director for twenty years. The chairman may be a lifelong friend. Another director may have joined the business when it was operating from a single site and stayed through every stage of its development.
There is enormous value in that institutional memory.
But familiarity can also make certain conversations harder.
People who have known each other for decades tend to know which subjects are sensitive. They know what the founder is likely to resist. They know which arguments have been had before. They understand the family dynamics that sit behind apparently commercial decisions.
That knowledge can help a board operate effectively.
It can also mean that difficult questions are sometimes softened before they are ever asked.
The people around the table
One of the things I have come to appreciate through working with founders and family businesses is that board effectiveness is rarely about the CVs on the table in isolation.
A business can have several impressive people around its board and still struggle to have the conversation it needs.
Equally, a relatively modest-looking board can be extraordinarily effective when the relationships are right and people are willing to challenge one another constructively.
The issue is often less about capability than relevance.
A director who was exactly right for the business five years ago may still be a very good director. But the business may now require something different from them.
That can be difficult to acknowledge because it feels personal.
In a listed company, there is generally a greater acceptance that boards evolve. Directors come and go, committees change, new expertise is introduced and succession planning is expected to be part of the process.
Family businesses can be different.
There is often a stronger sense of loyalty, and rightly so. People who have contributed over many years should not be casually discarded because the business has become more complicated.
But loyalty does not necessarily mean keeping everything as it is.
Sometimes the most respectful thing to do is to recognise that a person’s contribution belongs to one chapter of the company’s story, while the next chapter may require something else.
This becomes particularly important when the founder is beginning to step back.
For many founders, the board has historically been an extension of their own decision-making. They have known the business intimately and have often been the person everyone ultimately looked to when there was disagreement.
As that changes, the board has to become something slightly different.
The temptation can be to replace the founder’s influence with another powerful individual. A big-name chairman. A former chief executive. Someone with an impressive corporate pedigree.
Again, sometimes that is exactly right.
But there is a risk in simply finding another dominant voice.
The question is not who can replace the founder. It is whether the board can create the conditions in which the business can make good decisions without everything having to pass through one individual.
That is a much harder thing to appoint for.
It requires judgement about personalities as much as experience, and an understanding of the family as much as the business.
The right non-executive is not necessarily the person with the most impressive career; it is often the person who can see what the business has become without losing sight of what made it successful.
There is another complication that comes with growth.
As businesses become more sophisticated, management teams often become stronger. The chief executive may have substantial experience. The finance director may have led a number of transactions. There may be a capable commercial director, an experienced HR leader and specialist advisers around the company.
This can create an odd situation in which the board is actually less experienced than the executive team it is supposed to oversee.
Nobody necessarily notices because the business is performing.
But eventually a question arises: where does the executive team go when it needs genuine challenge?
A board should not exist simply to approve what management has already decided. Nor should it become a second management team, competing with the executives for control.
The space between those two positions is where good non-executive directors become valuable.
They can ask whether the assumptions behind a decision are sound. They can bring experience from having seen similar situations elsewhere. They can challenge a management team without undermining it. They can understand the difference between a difficult decision and a bad decision.
That becomes particularly important in family businesses because the board is often balancing several forms of accountability at once.
There is the business itself, with its employees, customers and suppliers.
There are shareholders, who may have very different expectations about returns and growth.
There is the family, whose relationship with the business can be emotional as well as economic.
And then there is the future.
A decision that makes perfect commercial sense today may have implications for the ownership or identity of the business ten years from now. Conversely, a decision made primarily to preserve family harmony may not always be in the company’s best interests.
The board sits in the middle of those tensions.
It is why appointing a non-executive simply because they have “done boards before” can miss the point.
The individual needs to understand what kind of board this is, what kind of business this has become and, perhaps most importantly, what the family is trying to preserve while the business continues to develop.
When the board starts to lag
The signs are not always obvious.
There may be no dramatic failure. No disastrous meeting. No major disagreement.
Instead, the board gradually becomes more comfortable discussing the things it has always discussed.
The numbers are reviewed. Operational matters are covered. Decisions are approved. The chief executive gives an update. Everyone leaves broadly comfortable with what has happened.
Meanwhile, the questions that will shape the next five years receive less attention.
What happens when the current generation no longer wants to run the business?
Does the ownership structure still make sense?
Should the company continue investing at the same rate?
What does growth actually mean to the different family shareholders?
Is the management team strong enough for the next stage?
What happens if the business doubles again?
Those questions can be uncomfortable precisely because there is rarely a single correct answer.
And perhaps that is why they belong in the boardroom.
I do not think the answer is for every family business to professionalise its board in the same way, bring in a collection of corporate non-executives or create an elaborate governance structure.
That can be just as unhelpful as doing nothing.
A board should reflect the business it serves.
What matters is that the people around the table remain capable of having the conversations the business now requires.
Sometimes that means bringing in someone new. Sometimes it means changing the role of an existing director. Sometimes it means recognising that the chairman needs to operate differently. And occasionally it means having a difficult conversation about whether someone who has made a valuable contribution should continue in the same role.
None of those decisions are particularly comfortable.
But discomfort is not necessarily evidence that something is wrong. In a growing family business, it can simply be evidence that the business has reached a point where old assumptions need to be examined.
The most effective boards I have encountered are not necessarily the ones with the greatest collection of experience. They are the ones where people understand why they are there, where they can disagree without damaging relationships and where the family feels sufficiently secure to hear something it may not want to hear.
That last point matters.
A board that exists only to reassure the family is unlikely to provide the challenge the business needs. A board that exists only to challenge the family may eventually lose its legitimacy.
The balance is more subtle than that.
Ultimately, the question of whether a board has kept pace with a business is not really about age, size or even the number of directors around the table.
It is about whether the board still adds something that the business cannot easily provide for itself.
A founder may instinctively know when that is no longer happening. Often, they know before anyone else does.
The difficulty is giving that instinct enough space to be heard.
Because by the time a business has clearly outgrown its board, the issue is rarely that the people around the table are incapable.
It is that the business has become something different from the business they originally came together to govern.
And recognising that difference may be one of the more important responsibilities a board has.
About the author
Oliver Denton is an Associate Partner at TWYD & Co. Much of his work involves helping owners think carefully about the leadership and governance their businesses need as circumstances change. Through conversations with families, boards and senior leaders, Oliver sees first-hand how questions about succession, ownership, leadership and board composition become increasingly connected as a business grows. His perspective is grounded in the practical realities of those conversations and the decisions that follow them.