Today’s businesses face unprecedented uncertainty. Even before 2020’s pandemic fundamentally upended the status quo, disruption was taking the form of new technology, market globalisation, and ageing demographics. Companies have had to change to meet their goals, but have their boards evolved with them? The board room is coming under increasing pressure to prove its value as the traditional business models from which it sprang undergo transformative innovation.
In this episode of WiFB, Meghan Juday, Board Chairman of Ideal Industries, a diversified family-owned business that designs and manufactures products for electrical, lighting, and infrastructure industries, discusses the challenges she faced and the revelations she boldly acted on when becoming the first female Chairman for her family’s 107-year-old company, in an industry overwhelmingly dominated by men.
- Family governance and corporate governance should complement each other and be equally invested in achieving the same objectives. Many families believe in the antiquated concept that they must “starve the family to pay the board”, but the two should be on equal footing — interacting with each other as if on a teeter-totter where the ultimate goal is to find the perfect degree of balance.
- Reshaping a board that better reflects an enterprise’s growth and culture is a difficult task that many avoid. But it’s important to select board members who have a desire to serve, rather than a desire to be served. Every board member should offer high levels of contribution and share the same interest, enthusiasm, and investment in the business as all stakeholders.
- It’s become commonplace for the boards of family businesses to disregard the “family” aspect of the enterprise, choosing instead to focus solely on the “professional” considerations of the business. But a board that understands and responds to the interrelation between the business and its business owners are likely to offer more relevant strategic suggestions.
- Above all, it’s critical to have clear objectives and expectations when formulating and maintaining a board’s composition. People can be hesitant to make changes to their board, but they would be surprised by the value new, outside perspectives bring to an underperforming board room.
R: Welcome to another episode of Women in Family Business. I’m very pleased to welcome today Meghan Juday, who is the chairman of the Board of Ideal Industries. Welcome, Meghan.
M: Thank you so much. It’s just such a pleasure to be here.
R: Meghan, I am really looking forward to our conversation today because I think we’re going to be tackling, first of all, something that is your expertise, absolutely by definition, in theory and in practice, which is amazing. But also because I think what we’re going to be talking about is very, very crucial when it comes to preparing family enterprises for what lies ahead in the years to come in terms of uncertainty, economic downturns and upturns hopefully as well at some point, and we are going to be talking about family business boards. I think this is such an exciting topic, but maybe just for context, because I did drop your title here at the beginning of the conversation, because I have to say, it’s very rare that we get a chairman of the board to talk about this kind of stuff because of course we know how busy you are with actually practicing what you preach. But maybe a little bit more about how you came to take such a deep interest in this topic and maybe you can give us some context as well from the background in terms of how your own journey brought you to this position in your family enterprise.
M: First of all, just full disclosure and disclaimer; I never thought I would work for our family business. I was not a man and every previous successor had been a man. We’re a fourth generation family owned business and we’re in the manufacturing space. It’s a space that men oftentimes feel more comfortable and historically have been more comfortable and it was a place where women were actively discouraged in previous generations from getting involved. So although I felt like I had value to bring, I just wasn’t really interested in the company and didn’t really think there was a place for me. So that was the background.
I went off and got into a big five consulting firm and loved that work. While I was there, happened to have met my husband, we got married, I got pregnant, and as I was really going through all those life stages, I realized that there was nobody in this consulting firm, no women between the ages of 30 and 45. We were on the road every week, different locations, long hours, and of course, didn’t really see how I could actually see my children and also do this job, which I did love. So I ended up deciding to take a year off and stay home with my son for the first year, which I was very excited to do.
I got a phone call from my father who was chairman of the board at the time and he said, “Can you just help us work on this project? We’re trying to figure out how to do this transition between the third generation to the fourth generation. We know it’s going to be different since we know we’re not going to have a family member executive in the corner office.” I said, “Sure. Hey, no problem. I have time.” I had a three week old. So of course I had acres of time. Had he called me three months later I would have said, “Under no circumstances do I have time for this.”
R: Also can I just say, Meghan, just as a disclaimer here, generally people out there when fathers call like that, you should really read the fine print. We know this by now. There has not been a podcast episode without the call being mentioned. Just be careful what you say yes to, people. Okay. We know this. A dangerous territory.
M: It’s so true. I did feel like what I learned working in this big five consulting firm was so extensible. A lot of what we were trying to do and I just felt like I had and also really wanted to stay in the workforce as well. Even though I was taking a year off, I really felt that I wanted to spend my time… I wasn’t very interested in just being home full time with my kids. I wanted to find some kind of balance where I could be present but also stay in the workforce. So I ended up basically taking on a family governance role very early in my career work and for the family, and then was named to the corporate board a few years after that as a family representative.
Then within a few years of that, our outside CEO — my father was chairman, but we had a non-family CEO — approached me. I worked very closely with him as a family liaison and family council chair. He said, “I think you’d be a great chairman.” It was really because of him that I was ever really, I think, considered. Had it really just been up to the existing board or to my family or my father, I don’t think I would be where I am today. But he took that third party outside perspective to really say, “Hey, I think you have the talent and expertise.” Then he said, “Of course, you’re going to have to earn it. I think you’d be great, but you got to earn it.” I’m the kind of person that you give me a goal, a target, I will work to achieve it.
R: Just go for it.
M: I love it. I love it so much. I really enjoy that kind of challenge. I spent eight years working with him and was put in charge of the nominating governance committee. I was the chair. I was the first one to form it and put the charter together and get it going on our board. Then I was named Vice Chairman basically in 2018, and then was named Chairman in 2020 and it was a very planned transition. I definitely proved my worth. I spent eight years traveling the globe, meeting the global teams and employees and learning the business, spending time with the CFO, doing executive education, the whole long list of things. In one way, it was a great background and I feel it was a really good education. But in another sense, I was named Board Chair in February of 2020 and no one was prepared for what happened in March.
R: Okay. So that’s lesson number two. Don’t take a promotion in the family business before a pandemic. There you go. In terms of takeaways, this episode is shaping up really well, I think. That must have been just… What a nightmare.
M: I was named Chairman. The company is 107 years old and there is that pressure of legacy. It’s like, “Oh my God. I hope I don’t mess it up or it doesn’t get messed up during my tenure. I have one job. Just keep the wheels on the bus.” I think that’s natural, especially when you are burdened with the legacy, not only of all the history, but everyone is relying on you and the family as well, and of course, all of the employees in the communities. It just took a week or something to get over that feeling. It’s like, “All right. I know I can do this going forward.”
Then the pandemic hit and it’s like, “I really have no idea what I’m doing. This is so much more.” By the way, I had a brand new CEO. He’d never been CEO before. He was in six months. I was brand new and I had a very challenging board. I had a board that I inherited directors who my father put on the board. I inherited directors that the previous chairman had put on the board and so they just weren’t really — they did not have the attributes that I needed to work with them and they didn’t have the attributes that we needed to do the work of the board during a global pandemic. A lot of them were on many other boards who were also demanding their time and it was pretty shocking to see just some of the attitudes and perspectives and pushback I got even trying to do really simple things like meet.
R: Do you think it was actually the preexisting dynamics of the board before you joined, or do you feel like it was really exacerbated by circumstances?
M: I think the dynamics existed before, but I think it just had to do with the leadership difference between what I think a board should do and what the previous CEO/Chairman thought needed to be done, and I really believe that directors are there to serve, not be served and that I want a board… This is a sidestep just for one second, tiny bit of background. We do not have family members in management. We don’t have really currently anybody, family members working in the family business, which means the value and importance of the board is very much heightened. So you have to not only have a very strong board, but they have to be ready to be fiduciaries for the shareholders in the company and they have to be active, curious, and be very much a checkpoint, a check in on what the CEO is doing because if you don’t have family members there doing it and you need to have also directors who are living the values and understand family business in a way that is — in a more organic way.
I felt like there were a couple things that were going on in our board that I just felt like our directors didn’t have. Although we had directors who had been on our board for 20 years, which by the way is way too long, it never really, even in their language, their contributions, and their perspectives, it never really was very clear that they understood what a family business is and what our family’s directives were. Part of that is on us. We could be more clear. But secondly, you really want someone who understands what a family business is and where we take the line of patient capital and where we take the line of we demand performance.
There was a gap between my father being chairman and me being chairman, and so the man who was chairman was also CEO between the two of us. He held that role for about eight years and that is something in my situation I would never go back to because our CEO chairman did not really like feedback from the board. So of course, he’s choosing directors and setting director expectations to not really give him very much feedback. That’s not the kind of board I want to execute on. I really feel like I want our board to be very much involved with oversight and to be able to provide real and constructive feedback to the CEO and the rest of the management team as well as deeply understand the family’s expectations and values.
R: Other characteristics of well-functioning family enterprise boards to you, that you have been able to instill or that you are basically trying to bring about also in your board or that you advise others to pursue, what would they be?
M: Well, for me, I think it’s really a high desire to serve. You really want people who are excited to be their people. There is this global wave of people wanting to get into corporate boards and there really should be nobody in your board who is a low or non-performer. If you have that, you have to make those changes because the return that you will get even in making that difficult decision is 10 fold, 1,000 fold. But for me, I think one of the things that’s really important to me is having a high level of curiosity. I don’t like people who postulate in the boardroom and stop conversations. There are people and I’ve had people on our board who speak with such authority that everyone else leans back in their chair and says, “Oh, well, that person really knows what they’re doing. They must be right.” Even if nobody agrees with them. That’s a conversation stopper. I want to have people in the room who are conversation starters.
I also really want to be with people, not only who are highly curious, but very approachable. Inheriting a board of far more senior people than me and who had been senior executives at very large firms, so I don’t think I commanded the respect that I thought I should, and certainly, there was one time I went to go visit one of our outside directors who’s no longer on our board. I spent six hours with him. He gave me the tour of the town and we went out to lunch and he showed me this and that and really in those six hours, I don’t think I got one question about myself, my kids, the company, anything. Those are not the kind of people you want on your board. You want them to be able to interact with other directors, with family members when they meet them, to be that kind of… You want to be able to know that you can pick up the phone and have that be an approachable, an easy conversation, people who care.
R: In your experience, or what are you also proactively doing now to safeguard your board or what should family enterprises do to safeguard their boards from, I guess, taking the wrong decisions or giving in to maybe some of the more negative dynamics in times of high pressure?
M: There’s a couple conversations we’ve had both in the family and the board. In the family, it’s really focused on investing and addressing any issues that are out there as they come up so that they don’t fester and create problems. The fourth generation, my generation, actually has been working with a licensed family business therapist to try to address some of the generational dynamics that have existed in our family just so that… We didn’t mean to start it during the pandemic. We had planned it and it just started during the pandemic. That was a very difficult project and we’re still working with the therapist, but it has armed us and actually I think, gotten us through some of the more challenging dynamics probably faster.
It also has armed the… In our family, certainly, and I’m guessing this is true in most, you have your super happy people, your neutral, to happy people, which is your majority, and then you have the smaller number of people, very, very unhappy and very vocal. What happened previously is in our dynamics, you had the super happy people, mostly who were leaders in the family or the company, trying to work and bridge the gaps on these two polar ends with the unhappy people and this neutral middle, a happy middle, was silent and wouldn’t intervene. Now what has happened in our therapy sessions is that that middle happy, silent middle group has now gotten into the conversation.
There’s a lot more alignment and there’s a lot more dialogue and a lot of people from that group have gotten a lot more active because of this. They didn’t realize their voice mattered even though we only said it 1,000 times. That’s just part of their whatever. We have this dynamic. So it’s been really helpful to have them involved in the dialogue because it takes the pressure off the leaders to try to fix the problem. Now we’re all making choices and being adults and all this stuff. I think that’s really important work and that’s work any family can start any time. But certainly, I’m grateful we did it even though at the time, of course, I hated it because I usually am the target of most people’s therapy. But I would do it again because the outcome’s been very positive and I feel like we’re better off as a family and it has further isolated some of the super negative people in a way that makes them think they are alone in their perspective and in the past I think that a lot more people sympathized with them.
Then in the boardroom, one of the things that we’ve done and I think this is what I was saying earlier that when you have your businesses performing really well, it’s sometimes hard to know if you have great directors. We made a lot of changes. We moved out four directors. We brought in two new directors who are fantastic and these were all outside directors. Then we have more coming. We’ll be adding in two more directors next year. But it’s been really focused on cultural fit values, expertise, obviously. I’m looking for a lot more of the fitting into the dynamics rather than just checking the box of skills, the skills box. I want a lot more in my directors and we’re looking at… We’ve already had strategic conversations around what happens when we hit a recession. Do you ban down the hatches and stock pile money? Is this the time where you try to go for expansion and become an opportunist? Where are your opportunities? Historically, family businesses are the economic engine of the economy during a recession because they actually become investors. Because they’re not running with any debt, things become a lot more reasonably priced. You can do acquisitions, you can invest in your business, and so a lot of companies then become acquisitive and very growth minded during recessions.
R: There’s a few things that you said that I find very interesting. First of all, I love how you describe the work that the family has had to put in. You know what’s so incredible about that kind of work is that unless you’ve actually done it or are doing it, it is very hard to convince other people of the actual benefit of these kinds of things. It sounds hard because it is hard. This is very, very hard work and it’s super disagreeable and it feels like you’re basically taking everything like there’s no carpet anymore. Everything is exposed. There’s nothing to sweep stuff under anymore. But it is insanely beneficial, especially in times of volatility when there’s some sort of unity on that side and I think this is so powerful that you’re confirming that. But I think it’s hard for families to do because it feels almost like raking up unnecessary conflict. Like, why are you bringing this up? We have Thanksgiving around the corner. You have all these articles coming up about what not to say at the Thanksgiving table and it’s just really interesting how this kind of proactive approach I think is so undervalued instead of waiting until the situation escalates to actually try to take steps before.
M: Something came to mind as you were saying that and that is every generation, I think, has a responsibility to do everything they possibly can to make their lives better, emotional lives, even, better for the next generation. What’s interesting about having to have done this work in the fourth generation is that the first, second, and third generation didn’t do any work. They did nothing and there was so much, so fewer of them. There’s seven third generation family members. There’s 20 of us and yet I’m dealing with emotional and system dynamics that started in the second generation that now I’m holding the bag for as a family leader. That had they taken the time to do the work, then it would be so much better for the rest of us. That’s what’s so noble about my generation. I give them tons of credit for taking this on. A lot of this was not their stuff. This was what was passed along.
R: It’s so typical for family generations to only consider the legacy as what is materially left behind and to forget that you leave that whole emotional baggage with whoever’s shoulders are there to put it on. It’s just so crazy that it takes so much to convince people that it’s worth investing in these things at the time when you’re still alive, when you’re still around, when you can still do something about it. I love that you brought that up. I think so important. Then to your other point about, I guess, adding also fresh blood to the board and I think this is so interesting that you’re doing this now. How does that work for you in terms of when is the right time, good time to bring in new blood?
M: But I really think you have to take a very clear look at what do you want your board to achieve. For me, I really wanted our board to be a strategic partner and I felt like our former board and the dynamics, it’s all about the people in the boardroom and the dynamics that we had, we didn’t have a high level of curiosity and we didn’t have a high level of service mindedness. I want people who are there to help and not to be served. There were some people who really felt like we should consider it a great honor to have them serve on our board, which we are honored. But at the same time, this is not a volunteer position. I have expectations and I need people to be present and available for us and ready to have the conversation.
That is one of the big changes that we made as I mentioned earlier. Is we went from having management present 60%, 70%, 80% of the time to really reducing that so that the board was speaking on topics in an educated fashion 60%, 70%, 80% of the time. That takes a different level of preparation and we definitely had some directors who got caught off guard even though I called them and said we’re not prepping you by redoing all the presentations that are in the deck. You have to come ready. It was very clear that they hadn’t read all the way through or hadn’t absorbed all the information.
I think it’s you really have to know what your expectations are, what you’re trying to get out of the board, and that you really want to set up your board composition to execute on that. For me, I felt that the existing board we had wasn’t delivering and executing on those goals and so that’s when we started making changes. As we brought in new directors, it’s when we really found the magic in bringing in new and outside perspective. I think people are very hesitant. My sense is people are hesitant to make changes in their boardroom. They’d rather wait out a low performer, wait for them to term out rather than to make a move. But my sense, my advice to anybody who has a low or non-performer in their boardroom is move them out faster. You will be shocked at the value and insights, enthusiasm, expertise, and curiosity that will come into your room because of it.
R: Is there a particular way to do it when it’s a family member, do you think? Are there kid gloves somewhere in the boardroom drawers that you can use or … Any advice on the difference?
M: It’s true. By the way, I’ve never had to kick a family member off the board. We have a director readiness program for our family directors and we don’t expect them to be executive level of our outside directors. But we do expect them to be able to understand and contribute to the conversation, which is a certain level of knowledge, and we want them to have a deep understanding of the family and family governance. We have a staged process where we work on getting people ready and I think that does really help. I think also we have baseline values that we want family members to meet before they come into the program, which I think weeds out some… If really a family member is only really bringing the family values and that’s it, that’s still a great start. But then the other thing that we, as I mentioned earlier, have a third party evaluator of the board who also does the CEO evaluation, and we’re adding in individual director evaluations as well of which family members will be a part. So you will be getting real feedback and I would expect anybody who comes into, any director who comes into the room, family or non-family, is open to feedback and wanting to make the changes to be an excellent director.
R: Ambition versus reality; how does it feel today to you? Do you feel you are growing into becoming the kind of chairman you want to be, or is it so different from what you expected that comparison doesn’t even — it doesn’t matter?
M: I would say I did not understand or have an appreciation for how complex it is to be board chair. It’s not setting four agendas a year and showing up. There’s a lot of stuff that goes on in the background to make sure that you’re putting the right agenda together, you have the right people at the table. In our last board search, we added two women to the board, which was the first female outside directors we’ve ever had. I realized in speaking with one of them that one of them was having a really hard time getting into the conversation and that was on me. My work I need to do as a facilitator and my work I need to do to make sure that everybody feels like they have a place at the table and that they’re all included.
So I just feel like I keep learning more and more as we go around what makes a great board, what makes a great board meeting. I mentioned we implemented a lot of changes when I came in. There’s still kind of a long list of things we have to do. Then, I believe in governance. Once you have it perfect, you probably need to look at it all again and it becomes a very iterative cycle. So I don’t feel like the job will ever be done. I’ll certainly feel more comfortable in it and one of the things that I did to try to help myself, just because as you mentioned I have terrible timing, and also I was running into enough problems in my own boardroom that I felt like I needed to speak with other people in this role. So I ended up accidentally. I thought I was starting a quarterly Zoom call with two or three other female board chairs and ended up with a international group of women who now meet 10 or 12 times a year and who are all board chairs. It got so complex that I ended up having…
R: Accidentally. I feel like we need to have a whole separate podcast about how to manage time and to say no and that kind of thing with you, Meghan.
M: It has made me such a better board chair to learn from these other women and who are… They’ve been in the way longer than me. They’ve seen it all. They’ve dealt with activist investors or challenging directors. They have a great recommendation on, hey, you should try X or Y, and it’s really accelerated my growth and also growth as chairman and then also has really provided that kind of support when things start going really wrong and you’re like, “Okay, is it me? What do I need to learn?” I feel like it’s okay to have enough to self-examine. I’m not saying I don’t have infinite self-doubt, but to just say what else could I be doing differently is still a really healthy question. That has been really, really helpful in starting this group.
R: You heard it here. I think for the listeners there’s a few takeaways here. Do’s and don’ts. Definitely, I think it’s so interesting to hear your story, Meghan. Thank you so much for sharing it and we look forward to talking to you hopefully again and again on the Women in Family Business so that we can follow your progress as you learn more about this adventure that you’re on. Thanks for joining us.
M: Thank you so much. It was such a pleasure to speak with you.