April 28, 2025 • 32 mins
In this episode of On Boards, hosts Joe Ayoub and Raza Shaikh welcome Lynn Clarke, an experienced leader in family board governance who has served on more than a dozen family and private equity-backed boards including as an independent chair and lead director.
Lynn is also a strategic advisor and mentor and has served on boards spanning from beverage and food services to e-commerce and manufacturing. Lynn has mentored next generation board members and leaders throughout her career and was named the Private Company Director of the Year by National Association of Corporate Directors in 2022. She also serves as one of three judges for Deloitte’s best managed private company awards program.
Key Takeaways
1. Interviewing for a board role
- With years of experience serving on boards, Lynn advises aspiring board members to carry a passion for the business, its products and what the company does. It’s important to understand why you want to serve on a board, what value you add and what new perspectives you believe you will bring. She advises to make these points clear when you are interviewing for a board seat.
2. New boards vs. existing boards
- Newly formed boards offer a unique opportunity to build the culture, rhythm, and structure of governance from the ground up, but its success is dependent on the principal shareholder(s), who will define the culture of the board and company. Shareholders set the tone.
3. Knowing when it’s time to leave a board or offboard a member
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Having the self-awareness is key to knowing when it’s time to leave. Lynn suggests asking yourself, “am I still a good fit?” and “do I like what I'm doing on this board?”, “Am I
enjoying the discussions at the board meeting?”, “Do I feel as though I am contributing to the growth of the company?” If the answers are no, maybe you need to consider stepping out. -
Offboarding a member is one of the challenging aspects of board governance, especially in close-knit or long-tenured groups. It requires direct but respectful conversations from the lead director, board chair, or governance chair.
-
Whether a board member is being asked to leave due to performance issues or company changes, Lynn recommends treating it like a celebration and acknowledgement of the person’s service on the board, almost like a retirement.
4. Board evaluations make it easier to provide ongoing feedback
- Even private and early-stage boards benefit from formal assessments. Annual board effectiveness and peer evaluations help surface underlying issues in board dynamics and performance. Peer evaluations can be sensitive for company boards, so Lynn suggests introducing different types of evaluations in parts.
Quotes
“ABARTA Coca-Cola was one of the first family-owned businesses I know to really think about independent governance. There were a majority of independent directors on a board, had a high quality strategic plan that is really a living, breathing document and a good family council or an ownership council. Those are the three things that take a business from Gen 1 or 2 into 3, 4
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:05):
Hello and welcome to On Boards a deepdive at what drives business success.
I'm Joe Ayoub and I'm here with myco-host Raza Shaikh twice a month.
On boards is the place to learn aboutone of the most critically-important
aspects of any company or organization.
its board of directors or advisorswith a focus on the important issues
(00:28):
that are facing boards, companyleadership, and stakeholders.
Joe and I speak with a wide range ofguests and talk about what makes a board
successful or unsuccessful, what itmeans to be an effective board member.
And how to make your board one of themost valuable assets of your organization.
(00:48):
Before we introduce our guest,we want to thank the law firm of
Nutter McClennen Fish, who are againsponsoring our On Boards summit
this year, taking place on Monday.
October 20th again in their beautifulconference center in the Boston Seaport.
Nutter has been an incrediblepartner with us in every way.
We appreciate all they'vedone to support this podcast.
(01:12):
Our guest today is Lynn ClarkeLynn has extensive experience
at family board including as anindependent chair and lead director.
She also is a strategic advisor and mentorto family board chairs for Vitamix and
for a Coca-Cola bottler, and she hasmentored next generation board members
and leaders throughout her career.
(01:35):
Her industry experience spans CPG,beverage, food, food service, e-commerce,
digital, retail, manufacturing,supply chain and logistics.
As an executive at PepsiCo, Lynn gainedfunctional expertise in corporate
strategy, operations, manufacturing,brand strategy, marketing, and sales.
(02:00):
She was named the Private Company Directorof the Year by National Association
of Corporate Directors in 2022.
Lynn also serves as one of thethree judges for Deloitte's best
managed private company programand frequently speaks and writes on
effective family business governance.
Welcome, Lynn.
(02:20):
It's great to have youtoday on the podcast.
Thank you, Joe and Raza.
I appreciate being asked.
So, let's start with your background,because I think it's particularly
pertinent here, given the deepand broad extent of the work
you've done as a board member.
First, start, if you would, with thefirst board, because that's always of
(02:40):
interest, and then let's talk about someof the other board work you've done.
Well, I've been a CEO three times andthat's sort of what led me into board
service, and specifically to privateequity and one a company that I was
able to acquire, an e-commerce company.
But it's always good to talk aboutmy first, what I call a real board,
(03:02):
because it's actually led me to dofamily business board governance to the
level and the extent that I've done.
As Raza said, I worked at PepsiCofor about 10 years, had 10 jobs, and
one of those jobs was being a generalmanager for the Philadelphia area,
(03:23):
so that meant all functions reportedinto me, with full P&L responsibility.
It's a CEO role, but within theconfines of a giant corporation,
so really great experience.
And I competed with ABARTA Coca-Cola inthe northeastern part of Pennsylvania.
(03:43):
Well, ABARTA Coca-Cola was my first board.
Right.
Classic.
Yeah, yeah.
What I didn't realize when I left PepsiCoand went to work as a CEO for a private
equity-owned firm, I really didn'tknow anything about family business.
And of course, the Coke folkscalled me after I left PepsiCo,
(04:05):
and I was like, "Family business.
Hmm.
Family business governance.
This is really interesting." itopened a whole new world for me.
On the ABARTA board, when I first joined,it was actually a holding company.
So, the company owned Coca-Coladistributors, bottlers in
part of Pennsylvania, inNew York state and in Ohio.
(04:28):
It also owned a frozen food company,oddly, a daily newspaper and an
oil and gas exploration business.
So, I was on the board for 13 years andone of the things that the board helped
the family shareholders, really the familyexecutives, think about is, do you want
to continue to be a holding company?
(04:49):
Where else can we take it to drive growth?
At the same time, Coca-Cola corporatewas changing its strategy to become,
kind of in beverage vernacular, muchmore like a beer distributor, so fewer
bottling operations, fewer manufacturingsites, bigger territories, and a focus on
(05:11):
getting the product from a manufacturerout into the consumer's hands.
So, a different structure,even though they own 90% of it.
So, we sold off KeHE Frozen Foods.
We sold, thank goodness, the dailynewspaper, and were able to still
monetize it nicely, and then exited fromthe oil and gas exploration business.
(05:35):
So, we became all in and I say we,because I was on the board for 13 years,
so we became all in a Coca-Cola bottlerand ended up buying the entire state
of Pennsylvania as territory exceptfor Philadelphia because the company
was headquartered in Pittsburgh andno one in Pittsburgh thinks Philly
is actually part of Pennsylvania.
(05:56):
You know that people all overthe country will be listening.
Yeah, I recognize that.
But the reality of that, even thoughthat's very true, it is the trade,
the grocery trade primarily, it'sreally driven by New York and New
Jersey based grocery chains, whereasPittsburgh chains were quite different,
Pittsburgh and the rest of Pennsylvania.
(06:17):
So, anyway, we acquired the restof the state except Philly and kept
the Cleveland area, and it's made ahuge difference in the organization.
It's become a much, much larger companyat the top line, certainly at the bottom
line and in the number of employees.
So, to go through that as your firstboard experience was an absolute
(06:41):
privilege for me to see that firsthand.
ABARTA was one of the firstfamily-held businesses to really
think about independent governance.
So, we were a majority independentdirectors on a board, and that high
quality strategic plan that is reallya living, breathing document and a
(07:02):
good family council or an ownershipcouncil, those are the three things
that take a business from Gen 1or 2 into 3, 4, 5, 6, and beyond.
One of their objectives was tomake it a multi-generational
successful, consistent business.
So, that sounds like an amazingfirst experience, and it obviously
(07:25):
led you to many more boards.
My understanding is you've served inmore than a dozen boards thus far.
That puts you in a position to reallyanswer a question that Raza and I
talk about all the time, which isserving on a board is a job, and you
know that well, and you're the kindof board member that really takes
preparing for that job seriously.
(07:46):
So, one question that we wanted to discusswith you is what advice do you give about
how to prepare for a board job interview?
I'm calling it job becausepeople think of it as a role.
It is actually employment.
And we think, and I think youmay share this, it's important to
(08:07):
think about it that way in the wayyou prepare for the interview and
everything you do subsequently.
So, what do you do to prepare andwhat's your advice about how to do it?
Well, let me speak to yourpoint about it's a job.
I take my commitments to thecompanies and the families that
I work with a 100% seriously thesame way that I did in running a
(08:31):
company or working for a Fortune 50.
I mean, you are committedto that organization; you're
a fiduciary for one thing.
But why would you do this unlessyou really wanted to help make an
impact, and the only way you canmake an impact is to take what you
do seriously, and so specifically forpreparation, I'm going to tell a story
(08:56):
and then I'll answer your question.
Okay.
Being on a "board," kind of in quotes,is kind of a trendy thing to do now.
There's lots of media attention onit, and I knew it was kind of over the
top when I was at my dermatologist,and he has a scalpel and he's like,
(09:18):
"Lynn, so you're on a bunch ofboards. Can you get me on a board?"
Classic, really.
"Can we just finish the stuff with thescalpel first and talk about it?" I
mean, he's a great dermatologist, buthe doesn't really know how to run a
business, like other people do that.
But it's so trendy, and it's the firstquestion I ask people when they tell
(09:42):
me without scalpels, like, "I wantto be on a board. How do I do that?"
Well, do you have a skillsetis the first question.
Have you been a CEO, a CFO, a COO?
I'm a little biased that you need to own apiano in order to be a good board member.
And so that's the first thing thatI think is important for you in your
(10:06):
journey to say, "Yeah, board, no board."
It's the first thing you needto think about when you've been
approached about joining a board.
Can I really make a contribution?
I'll go back to theABARTA Coca-Cola board.
I was a CEO.
I joined when I was running a company.
But boy, the other guys, they were allguys on the board, I was like intimidated.
(10:30):
They were highly experienced.
They were more experienced than me.
There were an impressivegroup, very nice people.
The first couple meetings are kind ofscary anyway, and especially for your
first board, but you need to be able tobring a level of experience to the board.
So, how do you prepare?
What value can you add to the board?
(10:52):
Again, going back to the trendything, there are so many people who
don't know why they want to be ona board, don't know what value they
can bring, and so it's the very firstthing I do when I have the honor of
talking to someone about the board.
I just joined the board of acompany called Just Born Candies.
(11:13):
You would know them because theymake PEEPS, the little marshmallow
PEEPs, Bunnies and things.
And I have a lot of consumer productsbackground and I also happen to love
that brand and have had it since I wasa tiny little person, and bringing that
kind of perspective and passion fortheir business was one of the things
(11:35):
that I made sure that I was clear aboutwhen I was interviewing for the board.
So, I think passion for the business,the product, the service, what the
company does is really important.
I have made the mistake of joininga board because someone asked, and
(11:57):
it was an interesting business,but I wasn't like over the moon.
You weren't fully engaged, you think?
No, I was fully engaged, of course.
because it's a job, to your earlier point.
But I didn't like love the business.
I couldn't get my brain aroundit to the level that I like to
(12:17):
get my brain around businesses.
There are strategies, felt morelike tactics to me than really
strategic choices, and we've allspent time doing tactical stuff.
You kind of have to do thatas you build your career.
But at this point, I really like thestrategy and I think one of the key
(12:39):
things that I contribute to a boardis that higher level of thinking
that you need if you want to havea successful long-term business.
Lynn, that's great advice on interviewingfor board role, that is a job.
I wanted to ask about anotherscenario where there is a newly-formed
(13:00):
board and it is very exciting.
What are some of the thingsthat distinguish serving on a
newly-formed board versus boardsthat are already in motion and exist?
What are some of the differences?
So, I've been on a couple newly-formedboards, and actually right now I'm working
with a board chair to help them form a newboard because of some shareholder exits.
(13:26):
So, we're kind of starting from scratch.
So, I kind of have threedifferent views on that.
When you join a board like Idid at Coca-Cola, that board
has its processes in place.
It sort of operates likea machine in some ways.
(13:47):
There is not a process inplace for a newly-formed board.
Even when there's been a consultantlike you guys who've helped them
form a board, having a laundry listof these are the key things you need
as a board and actually executingthose key things are quite different.
(14:08):
So, it's really important when you're ona newly-formed board to think about what
you know from boards that have been aroundfor a while, and how do you apply those
learnings to help support the formationand the development of the new board?
So, one of the things that happens in anew board is you end up being, I'll say,
(14:33):
again, my experience, a tighter team.
So, I was on the board of a foodservice company in Texas, and
we all started at the same time.
So, there were five independentdirectors, three family members, and
like we were a very tight board becausewe all came in at the ground level.
(14:58):
And you're all figuringit out at the same time.
Yes, exactly and the shareholderson the board were also figuring out,
"Well, how do you do things in thebest possible way?" And it was part
of a generational transition, and I'msure you guys have seen this, a lot of
times what drives the formation of aboard is father is exiting, a daughter
(15:19):
is coming in, whatever it might be.
I've also been on a board briefly.
There was a newly-formed board and we hadfour board meetings, one by Zoom, and a
few weeks after that, got the phone callon a Zoom, we're disbanding our board.
(15:42):
What I learned from that is unless theprincipal shareholder who often is the
CEO and sometimes the founder of thebusiness or second generation CEO, unless
they are all in and are comfortablebeing asked questions by outsiders,
(16:03):
there's no way on earth a board is afiduciary or advisory board is going
to be successful in that structure.
As early stage investors, things thatI do day to day, we are often the first
sophisticated money in a startup, andas such, are often forming newly formed
(16:26):
boards or putting together maybe twocommon shareholder representations
and two investor representation andone independent type of a board.
You're absolutely right that forming a newboard is different also in the sense that
the processes have not been established.
You are learning together,which is a great thing.
You will become part of that team.
(16:48):
But we advise the new board formations iskind of training everybody at the onset.
Actually, having a checklist saying,establish a dashboard, figure
out who's doing what on the boardand what are the roles, check D&O
insurance and all of those things.
But basically spend the first two tofour board meetings in calibration mode,
(17:13):
you are actually figuring out how thisboard will work, and I think that doesn't
happen often at late stage companies.
But as you know, with family-heldbusinesses and then early stage
or venture-backed companies,new boards do get formed, and
it's a great thing actually.
Also just to add, the way you describedthat, if you are not even a newly
(17:35):
formed board, but you are a boardthat got added five new members at
the same time for some good reasons,that is a really new group of people
that needs to calibrate and figureout how to work through the process.
So, here's a question for both of you.
When does a newly formed board doesit mean that the role of the chair
(17:58):
is even more important than normal?
In my view, absolutely.
In fact, the lead director or chairmanthat we appoint is the one that we
basically say, "You know, this is a job.This is a team. And every team needs
to have a team leader and the chairof the board, he or she would set the
(18:20):
tone, set the process, set the cultureof the board," and culture of the
definition is culture is what you do.
So, absolutely, the chair or the leaddirector has a very, very important role.
I can give you a specific example.
I'm lead director forVollrath Manufacturing.
We manufacture a lot of food servicerelated equipment and commercial kitchens
(18:44):
and that sort of product line, andwhen I joined the board in 2020, at
the beginning of COVID, we had severalmajority independent director on the
board, and it is 150-year-old company,just to put that in perspective.
Then one board member left and thenanother board member left and I had
replaced someone who was rollingoff the board, so I was really new.
(19:09):
In 2021, the third board director,because of some personal issues and
some health stuff said, "I need toleave the board." So, here we are, me,
the chairman who's a shareholder, thenon-family CEO, and that's the board.
(19:32):
Hmm.
So, we started replacing, and lastyear we put our last board member on in
addition to two additional family members.
So, we're still majority independentdirector, but these last three and
a half-ish years have been just onetransition after another and the culture
(19:53):
of the company is very strong, as youcan imagine, for 150-year-old company,
but trying to bring a director on ata time, and the ideal thing is bring
a couple people on at a time, becausethen they learn together and they
get to be really good team members.
But last year is really the firsttime I feel like the board is working
(20:16):
well together because everyone'sbeen on the board at least a
year, and kind of know each other.
We have very good processes.
The processes that have always beengood and we've tightened them up.
So, what a great feeling to rebuilda board and find that at the end
of the process, it's really ahigh-functioning, well-performing board.
(20:38):
I think that that mustbe pretty gratifying.
So, Raza, you were talking aboutnewly formed boards for early
stage companies, I have a littleexperience with that as well.
I've actually helped three early stagecompanies kind of get to the next
place, which is a Massachusetts-basedor was a Massachusetts-based
(20:58):
company out of the beverage world.
I told you my beverage experiencehad helped me with this.
The brand is called Levia, and werolled it out in about six months
and a few months later we had anoffer from a Canadian public company.
So, it's a cannabis-based beverage,so kind of can't trade in every state.
(21:21):
So, that was a really great experiencefrom the standpoint of working with
the founders to help them, if you will,kind of professionalize the process.
I was interim CEO for a little while;kind of organized the board, did some
fundraising for them, some capitalraise for them, and then kind of
(21:43):
helped them get to the next level.
But being a board member and an interimCEO is a really unique role to play.
Because you're helping structure thecompany, but you're also helping structure
the board, and those boards for earlystage companies can make a huge difference
in the success or failure of the exit.
(22:06):
Well said, Lynn, and to me, thatemphasizes the role of that.
We call it chair or lead director, butbasically somebody who has governance
experience and is able to helpshape up and set up the new board.
A lot of times with early stagecompanies, you have founders who don't
have a ton of experience; they'regreat fun to work with, but they need
(22:29):
to remember what their swim lanes are.
So, often as a board chair or a lead oran interim CEO, you're trying to keep
those wonderfully creative people inthe right swim lane so they don't kill
each other on top of everything else.
Right.
So, we've talked aboutinterviewing for a board.
(22:49):
We've talked about newly formed boards.
Let's talk about maybe the most difficultaspect of boards, which is when is it
time to leave and how does a board memberknow, and then we'll talk about what
happens when board members don't knowit's time to leave and how to exit them.
But how do you knowwhen it's time to leave?
And have you actually left boardswhen you thought your time was up?
(23:13):
I'll answer your second question first.
Yes, for sure.
And I wrote an article for somepublication not that long ago,
and you know when it's time to go.
You know when it's time to go froma job job, from a 48-hour, 50-hour
a week job, and so you have to keepthat in mind as a board member.
(23:35):
I look for a couple signs.
For me personally, am I still excitedabout going to the board meetings?
Like going to a job.
You're absolutely right on that, Joe.
Am I excited about going to thedinner with the night before, because
there's always a dinner the nightbefore with my fellow board members.
Do I enjoy the conversations?
(23:56):
Am I feeling like it's a good fit?
No matter how many years you've been onthe board, do you like what you're doing?
Yeah.
And if you answer those two questions withno, maybe you better look in the mirror.
So, I'm going to say this, what youare saying is true, but it requires
(24:16):
a certain level of self-awarenessthat many people either don't have
or ignore when the time comes.
My observation, I think Raza and I havetalked about this, is that a small number
of board members who depart a boarddo it because they decide it's time.
It's way more common to be asked, it'snot always necessarily a negative thing,
(24:43):
but many board members, while they mayexperience some of what you're saying,
don't have the self-awareness to processit and go and say, "I'm leaving the
board, or it's time for me to leave."
So, in those instances, let's talkabout how to offboard people, because
one of the things we've talkedabout a lot is it is the single most
(25:06):
difficult thing, and many boardsdon't do it well, and they avoid it.
I mean, one reason that boards don'tchange board members is they don't want
to deal with the offboarding, whichis a bad reason to do it, but we all
understand that it can be difficultif you haven't put the right things
in play to set it up for an exit.
So, talk about what you've doneas a chair, what you've done as an
(25:30):
owner to make sure that the board isrefreshed, and how do you deal with
the board members that need to leave.
So, when you have the opportunity, thebest possible thing you can do to prevent
problems is, "Okay, we've just formedthis board, or we've just put all of
you folks on the board. We're all newtogether. One of the key aspects of this
(25:55):
is we do an annual board effectivenessevaluation of the interaction of the
board, both the board dynamics, andwe'll call it the board operations."
Yeah, that's pretty easy to do, right?
It doesn't get into emotional stuff.
"Oh, by the way, the other thingthat we do is peer evaluation."
Mm.
That's when it gets a little sensitive,and in a privately held company business,
(26:20):
it's, I think, easier to do peerevaluations than the SEC requirements for
public company boards, because that's awhole another level and we're not going
to talk about that today, fortunately.
So, I think if you set it up theright way, it makes it a lot easier
to provide ongoing feedback, andyou kind of have to do it in parts.
(26:46):
You sort of have to start withthe board effectiveness piece, and
in my opinion, in my experience,then you add the peer evaluation
onto it.
But of course then I know, Joe, you'regoing to ask me the question, "Well, what
happens if the peer evaluation is horribleto one board member?" Well then, the
lead independent director and the chair,or the governance chair and the board
(27:10):
chair, some combination of those positionshas to have the guts and the cajones as
such to speak nicely with that director,and this isn't a job in this particular
case, you don't give a board member aperformance improvement plan and evaluate
(27:35):
them in three months through six months
because you only see each otherfour or five times a year.
Hmm.
And so, I think that this is oneof those answers where it depends.
So, it does depend on theboard member in question here.
Is this something that the entireboard has known for a year, two
(27:55):
years, like they're not performing.
They've PO'd a bunch of other people onthe board and perhaps the management team,
then you have to make the timing decision.
But anyone who's on a board is amature executive, theoretically.
No, no, no.
Well then, that's a different problemwith how people are selected for boards.
(28:18):
That is true.
Theoretically, should all be matureexecutives, experienced, and so
everyone at some point or another intheir career has had, we'll call it
negative feedback, and that's whatthis is, but the issue is like who
has the guts to do that on a board?
(28:39):
And how do you deliver it soit doesn't feel so negative,
I would say is part of it.
I mean, it may be a result that theboard member doesn't want or doesn't
want to hear about it, but I thinkone of the things we talked about
when we spoke a couple of weeksago, or actually several weeks ago,
was you want to do it with respect,obviously, and hopefully walk away
(28:59):
with as good a reaction as you can get.
And that's not easy.
No, it isn't easy.
There are a couple kindof ways to do this.
One is you speak to the person andsay, "After the next board meeting,
that'll be your last board meeting,but we're going to have a celebration.
All of your service at that meeting,you know, it's time for you to move on.
(29:20):
You've been on the board X years, andso thank you for your service," and you
make a big deal out of it at the boardmeeting or a successive board meeting.
It depends on the timingof all that stuff.
So, that's the best way, almost like aretirement, and you position it that way.
Everyone on the board knows why thisperson is going, but everyone plays
(29:47):
nice on a team and says thank you.
That sounds like it could feel a littledisingenuous when it's happening.
Oh, it does.
I've been on a board where we didnot a yearend, we didn't renew a
board member's term for next year,but we had a nice little kind of.
I'll add that there is another veryimportant scenario where people would
be offboarded and the scenario hasnothing to do with performance, and it
(30:10):
has everything to do with the company'sneeds evolving and the board members'
skills being no longer relevant.
I think for that scenario,the party would be great.
And the conversation is a heckof a lot easier in that scenario.
I'll give you another scenario.
We brought this gentleman onto theboard, had the exact background, like
(30:34):
everything on the board spec checked out.
We were all excited.
The first meeting, he attempts to takeit over and made a comment like, "Well,
you know, I want to understand morefrom the shareholder and executive
perspective." "Well, I'm sorry.
The rest of us have been onthis board for a long time.
(30:56):
You really need to understandthe independent director
experience and perspective."
Mm.
Then we're on a call and he sayssomething totally inappropriate,
I don't remember what it was.
By the way, I'm non-govchair for this board.
So, I called the chair after our call.
(31:16):
I'm like, "This isn't working.
He's like the smartest guy in the room."We gave him a term called the "lord of
the board," and I had the true pleasureof calling the lord and saying, "Look, you
know, thanks very much for your service onthis call and meeting, but it is just not
(31:38):
working out from a cultural standpoint."He was livid like he was yelling.
But you know something, you saved everyonea lot of heartache in the next year,
two years, three years, going throughboard meetings with someone that the
whole room doesn't want in the room.
You can tell right away, it was soclear, and the board had been together
(32:01):
a while before this person came on.
Lynn, it's been great speaking with you.
Thanks so much for joiningus today On Boards.
Thank you very much for inviting me.
I've learned, and have beenreminded of a variety of things
because of your questions.
Thank you, and thank you all for listeningto On Boards with our guest, Lynn Clarke.
(32:25):
Please visit our websiteat OnBoardsPodcast.com.
That's OnBoardsPodcast.com.
We'd love to hear your comments,suggestions, and feedback.
If you're not already a subscriber, pleasebe sure to subscribe at Apple Podcast,
Spotify, or wherever you get your podcast.
And remember to leaveus a five-star review.
(32:46):
And please tune in for thenext episode of On Boards.
Thanks.
Hello and welcome to On Boards a deepdive at what drives business success.
I'm Joe Ayoub and I'm here with myco-host Raza Shaikh twice a month.
On boards is the place to learn aboutone of the most critically-important
aspects of any company or organization.
its board of directors or advisorswith a focus on the important issues
(00:28):
that are facing boards, companyleadership, and stakeholders.
Joe and I speak with a wide range ofguests and talk about what makes a board
successful or unsuccessful, what itmeans to be an effective board member.
And how to make your board one of themost valuable assets of your organization.
(00:48):
Before we introduce our guest,we want to thank the law firm of
Nutter McClennen Fish, who are againsponsoring our On Boards summit
this year, taking place on Monday.
October 20th again in their beautifulconference center in the Boston Seaport.
Nutter has been an incrediblepartner with us in every way.
We appreciate all they'vedone to support this podcast.
(01:12):
Our guest today is Lynn ClarkeLynn has extensive experience
at family board including as anindependent chair and lead director.
She also is a strategic advisor and mentorto family board chairs for Vitamix and
for a Coca-Cola bottler, and she hasmentored next generation board members
and leaders throughout her career.
(01:35):
Her industry experience spans CPG,beverage, food, food service, e-commerce,
digital, retail, manufacturing,supply chain and logistics.
As an executive at PepsiCo, Lynn gainedfunctional expertise in corporate
strategy, operations, manufacturing,brand strategy, marketing, and sales.
(02:00):
She was named the Private Company Directorof the Year by National Association
of Corporate Directors in 2022.
Lynn also serves as one of thethree judges for Deloitte's best
managed private company programand frequently speaks and writes on
effective family business governance.
Welcome, Lynn.
(02:20):
It's great to have youtoday on the podcast.
Thank you, Joe and Raza.
I appreciate being asked.
So, let's start with your background,because I think it's particularly
pertinent here, given the deepand broad extent of the work
you've done as a board member.
First, start, if you would, with thefirst board, because that's always of
(02:40):
interest, and then let's talk about someof the other board work you've done.
Well, I've been a CEO three times andthat's sort of what led me into board
service, and specifically to privateequity and one a company that I was
able to acquire, an e-commerce company.
But it's always good to talk aboutmy first, what I call a real board,
(03:02):
because it's actually led me to dofamily business board governance to the
level and the extent that I've done.
As Raza said, I worked at PepsiCofor about 10 years, had 10 jobs, and
one of those jobs was being a generalmanager for the Philadelphia area,
(03:23):
so that meant all functions reportedinto me, with full P&L responsibility.
It's a CEO role, but within theconfines of a giant corporation,
so really great experience.
And I competed with ABARTA Coca-Cola inthe northeastern part of Pennsylvania.
(03:43):
Well, ABARTA Coca-Cola was my first board.
Right.
Classic.
Yeah, yeah.
What I didn't realize when I left PepsiCoand went to work as a CEO for a private
equity-owned firm, I really didn'tknow anything about family business.
And of course, the Coke folkscalled me after I left PepsiCo,
(04:05):
and I was like, "Family business.
Hmm.
Family business governance.
This is really interesting." itopened a whole new world for me.
On the ABARTA board, when I first joined,it was actually a holding company.
So, the company owned Coca-Coladistributors, bottlers in
part of Pennsylvania, inNew York state and in Ohio.
(04:28):
It also owned a frozen food company,oddly, a daily newspaper and an
oil and gas exploration business.
So, I was on the board for 13 years andone of the things that the board helped
the family shareholders, really the familyexecutives, think about is, do you want
to continue to be a holding company?
(04:49):
Where else can we take it to drive growth?
At the same time, Coca-Cola corporatewas changing its strategy to become,
kind of in beverage vernacular, muchmore like a beer distributor, so fewer
bottling operations, fewer manufacturingsites, bigger territories, and a focus on
(05:11):
getting the product from a manufacturerout into the consumer's hands.
So, a different structure,even though they own 90% of it.
So, we sold off KeHE Frozen Foods.
We sold, thank goodness, the dailynewspaper, and were able to still
monetize it nicely, and then exited fromthe oil and gas exploration business.
(05:35):
So, we became all in and I say we,because I was on the board for 13 years,
so we became all in a Coca-Cola bottlerand ended up buying the entire state
of Pennsylvania as territory exceptfor Philadelphia because the company
was headquartered in Pittsburgh andno one in Pittsburgh thinks Philly
is actually part of Pennsylvania.
(05:56):
You know that people all overthe country will be listening.
Yeah, I recognize that.
But the reality of that, even thoughthat's very true, it is the trade,
the grocery trade primarily, it'sreally driven by New York and New
Jersey based grocery chains, whereasPittsburgh chains were quite different,
Pittsburgh and the rest of Pennsylvania.
(06:17):
So, anyway, we acquired the restof the state except Philly and kept
the Cleveland area, and it's made ahuge difference in the organization.
It's become a much, much larger companyat the top line, certainly at the bottom
line and in the number of employees.
So, to go through that as your firstboard experience was an absolute
(06:41):
privilege for me to see that firsthand.
ABARTA was one of the firstfamily-held businesses to really
think about independent governance.
So, we were a majority independentdirectors on a board, and that high
quality strategic plan that is reallya living, breathing document and a
(07:02):
good family council or an ownershipcouncil, those are the three things
that take a business from Gen 1or 2 into 3, 4, 5, 6, and beyond.
One of their objectives was tomake it a multi-generational
successful, consistent business.
So, that sounds like an amazingfirst experience, and it obviously
(07:25):
led you to many more boards.
My understanding is you've served inmore than a dozen boards thus far.
That puts you in a position to reallyanswer a question that Raza and I
talk about all the time, which isserving on a board is a job, and you
know that well, and you're the kindof board member that really takes
preparing for that job seriously.
(07:46):
So, one question that we wanted to discusswith you is what advice do you give about
how to prepare for a board job interview?
I'm calling it job becausepeople think of it as a role.
It is actually employment.
And we think, and I think youmay share this, it's important to
(08:07):
think about it that way in the wayyou prepare for the interview and
everything you do subsequently.
So, what do you do to prepare andwhat's your advice about how to do it?
Well, let me speak to yourpoint about it's a job.
I take my commitments to thecompanies and the families that
I work with a 100% seriously thesame way that I did in running a
(08:31):
company or working for a Fortune 50.
I mean, you are committedto that organization; you're
a fiduciary for one thing.
But why would you do this unlessyou really wanted to help make an
impact, and the only way you canmake an impact is to take what you
do seriously, and so specifically forpreparation, I'm going to tell a story
(08:56):
and then I'll answer your question.
Okay.
Being on a "board," kind of in quotes,is kind of a trendy thing to do now.
There's lots of media attention onit, and I knew it was kind of over the
top when I was at my dermatologist,and he has a scalpel and he's like,
(09:18):
"Lynn, so you're on a bunch ofboards. Can you get me on a board?"
Classic, really.
"Can we just finish the stuff with thescalpel first and talk about it?" I
mean, he's a great dermatologist, buthe doesn't really know how to run a
business, like other people do that.
But it's so trendy, and it's the firstquestion I ask people when they tell
(09:42):
me without scalpels, like, "I wantto be on a board. How do I do that?"
Well, do you have a skillsetis the first question.
Have you been a CEO, a CFO, a COO?
I'm a little biased that you need to own apiano in order to be a good board member.
And so that's the first thing thatI think is important for you in your
(10:06):
journey to say, "Yeah, board, no board."
It's the first thing you needto think about when you've been
approached about joining a board.
Can I really make a contribution?
I'll go back to theABARTA Coca-Cola board.
I was a CEO.
I joined when I was running a company.
But boy, the other guys, they were allguys on the board, I was like intimidated.
(10:30):
They were highly experienced.
They were more experienced than me.
There were an impressivegroup, very nice people.
The first couple meetings are kind ofscary anyway, and especially for your
first board, but you need to be able tobring a level of experience to the board.
So, how do you prepare?
What value can you add to the board?
(10:52):
Again, going back to the trendything, there are so many people who
don't know why they want to be ona board, don't know what value they
can bring, and so it's the very firstthing I do when I have the honor of
talking to someone about the board.
I just joined the board of acompany called Just Born Candies.
(11:13):
You would know them because theymake PEEPS, the little marshmallow
PEEPs, Bunnies and things.
And I have a lot of consumer productsbackground and I also happen to love
that brand and have had it since I wasa tiny little person, and bringing that
kind of perspective and passion fortheir business was one of the things
(11:35):
that I made sure that I was clear aboutwhen I was interviewing for the board.
So, I think passion for the business,the product, the service, what the
company does is really important.
I have made the mistake of joininga board because someone asked, and
(11:57):
it was an interesting business,but I wasn't like over the moon.
You weren't fully engaged, you think?
No, I was fully engaged, of course.
because it's a job, to your earlier point.
But I didn't like love the business.
I couldn't get my brain aroundit to the level that I like to
(12:17):
get my brain around businesses.
There are strategies, felt morelike tactics to me than really
strategic choices, and we've allspent time doing tactical stuff.
You kind of have to do thatas you build your career.
But at this point, I really like thestrategy and I think one of the key
(12:39):
things that I contribute to a boardis that higher level of thinking
that you need if you want to havea successful long-term business.
Lynn, that's great advice on interviewingfor board role, that is a job.
I wanted to ask about anotherscenario where there is a newly-formed
(13:00):
board and it is very exciting.
What are some of the thingsthat distinguish serving on a
newly-formed board versus boardsthat are already in motion and exist?
What are some of the differences?
So, I've been on a couple newly-formedboards, and actually right now I'm working
with a board chair to help them form a newboard because of some shareholder exits.
(13:26):
So, we're kind of starting from scratch.
So, I kind of have threedifferent views on that.
When you join a board like Idid at Coca-Cola, that board
has its processes in place.
It sort of operates likea machine in some ways.
(13:47):
There is not a process inplace for a newly-formed board.
Even when there's been a consultantlike you guys who've helped them
form a board, having a laundry listof these are the key things you need
as a board and actually executingthose key things are quite different.
(14:08):
So, it's really important when you're ona newly-formed board to think about what
you know from boards that have been aroundfor a while, and how do you apply those
learnings to help support the formationand the development of the new board?
So, one of the things that happens in anew board is you end up being, I'll say,
(14:33):
again, my experience, a tighter team.
So, I was on the board of a foodservice company in Texas, and
we all started at the same time.
So, there were five independentdirectors, three family members, and
like we were a very tight board becausewe all came in at the ground level.
(14:58):
And you're all figuringit out at the same time.
Yes, exactly and the shareholderson the board were also figuring out,
"Well, how do you do things in thebest possible way?" And it was part
of a generational transition, and I'msure you guys have seen this, a lot of
times what drives the formation of aboard is father is exiting, a daughter
(15:19):
is coming in, whatever it might be.
I've also been on a board briefly.
There was a newly-formed board and we hadfour board meetings, one by Zoom, and a
few weeks after that, got the phone callon a Zoom, we're disbanding our board.
(15:42):
What I learned from that is unless theprincipal shareholder who often is the
CEO and sometimes the founder of thebusiness or second generation CEO, unless
they are all in and are comfortablebeing asked questions by outsiders,
(16:03):
there's no way on earth a board is afiduciary or advisory board is going
to be successful in that structure.
As early stage investors, things thatI do day to day, we are often the first
sophisticated money in a startup, andas such, are often forming newly formed
(16:26):
boards or putting together maybe twocommon shareholder representations
and two investor representation andone independent type of a board.
You're absolutely right that forming a newboard is different also in the sense that
the processes have not been established.
You are learning together,which is a great thing.
You will become part of that team.
(16:48):
But we advise the new board formations iskind of training everybody at the onset.
Actually, having a checklist saying,establish a dashboard, figure
out who's doing what on the boardand what are the roles, check D&O
insurance and all of those things.
But basically spend the first two tofour board meetings in calibration mode,
(17:13):
you are actually figuring out how thisboard will work, and I think that doesn't
happen often at late stage companies.
But as you know, with family-heldbusinesses and then early stage
or venture-backed companies,new boards do get formed, and
it's a great thing actually.
Also just to add, the way you describedthat, if you are not even a newly
(17:35):
formed board, but you are a boardthat got added five new members at
the same time for some good reasons,that is a really new group of people
that needs to calibrate and figureout how to work through the process.
So, here's a question for both of you.
When does a newly formed board doesit mean that the role of the chair
(17:58):
is even more important than normal?
In my view, absolutely.
In fact, the lead director or chairmanthat we appoint is the one that we
basically say, "You know, this is a job.This is a team. And every team needs
to have a team leader and the chairof the board, he or she would set the
(18:20):
tone, set the process, set the cultureof the board," and culture of the
definition is culture is what you do.
So, absolutely, the chair or the leaddirector has a very, very important role.
I can give you a specific example.
I'm lead director forVollrath Manufacturing.
We manufacture a lot of food servicerelated equipment and commercial kitchens
(18:44):
and that sort of product line, andwhen I joined the board in 2020, at
the beginning of COVID, we had severalmajority independent director on the
board, and it is 150-year-old company,just to put that in perspective.
Then one board member left and thenanother board member left and I had
replaced someone who was rollingoff the board, so I was really new.
(19:09):
In 2021, the third board director,because of some personal issues and
some health stuff said, "I need toleave the board." So, here we are, me,
the chairman who's a shareholder, thenon-family CEO, and that's the board.
(19:32):
Hmm.
So, we started replacing, and lastyear we put our last board member on in
addition to two additional family members.
So, we're still majority independentdirector, but these last three and
a half-ish years have been just onetransition after another and the culture
(19:53):
of the company is very strong, as youcan imagine, for 150-year-old company,
but trying to bring a director on ata time, and the ideal thing is bring
a couple people on at a time, becausethen they learn together and they
get to be really good team members.
But last year is really the firsttime I feel like the board is working
(20:16):
well together because everyone'sbeen on the board at least a
year, and kind of know each other.
We have very good processes.
The processes that have always beengood and we've tightened them up.
So, what a great feeling to rebuilda board and find that at the end
of the process, it's really ahigh-functioning, well-performing board.
(20:38):
I think that that mustbe pretty gratifying.
So, Raza, you were talking aboutnewly formed boards for early
stage companies, I have a littleexperience with that as well.
I've actually helped three early stagecompanies kind of get to the next
place, which is a Massachusetts-basedor was a Massachusetts-based
(20:58):
company out of the beverage world.
I told you my beverage experiencehad helped me with this.
The brand is called Levia, and werolled it out in about six months
and a few months later we had anoffer from a Canadian public company.
So, it's a cannabis-based beverage,so kind of can't trade in every state.
(21:21):
So, that was a really great experiencefrom the standpoint of working with
the founders to help them, if you will,kind of professionalize the process.
I was interim CEO for a little while;kind of organized the board, did some
fundraising for them, some capitalraise for them, and then kind of
(21:43):
helped them get to the next level.
But being a board member and an interimCEO is a really unique role to play.
Because you're helping structure thecompany, but you're also helping structure
the board, and those boards for earlystage companies can make a huge difference
in the success or failure of the exit.
(22:06):
Well said, Lynn, and to me, thatemphasizes the role of that.
We call it chair or lead director, butbasically somebody who has governance
experience and is able to helpshape up and set up the new board.
A lot of times with early stagecompanies, you have founders who don't
have a ton of experience; they'regreat fun to work with, but they need
(22:29):
to remember what their swim lanes are.
So, often as a board chair or a lead oran interim CEO, you're trying to keep
those wonderfully creative people inthe right swim lane so they don't kill
each other on top of everything else.
Right.
So, we've talked aboutinterviewing for a board.
(22:49):
We've talked about newly formed boards.
Let's talk about maybe the most difficultaspect of boards, which is when is it
time to leave and how does a board memberknow, and then we'll talk about what
happens when board members don't knowit's time to leave and how to exit them.
But how do you knowwhen it's time to leave?
And have you actually left boardswhen you thought your time was up?
(23:13):
I'll answer your second question first.
Yes, for sure.
And I wrote an article for somepublication not that long ago,
and you know when it's time to go.
You know when it's time to go froma job job, from a 48-hour, 50-hour
a week job, and so you have to keepthat in mind as a board member.
(23:35):
I look for a couple signs.
For me personally, am I still excitedabout going to the board meetings?
Like going to a job.
You're absolutely right on that, Joe.
Am I excited about going to thedinner with the night before, because
there's always a dinner the nightbefore with my fellow board members.
Do I enjoy the conversations?
(23:56):
Am I feeling like it's a good fit?
No matter how many years you've been onthe board, do you like what you're doing?
Yeah.
And if you answer those two questions withno, maybe you better look in the mirror.
So, I'm going to say this, what youare saying is true, but it requires
(24:16):
a certain level of self-awarenessthat many people either don't have
or ignore when the time comes.
My observation, I think Raza and I havetalked about this, is that a small number
of board members who depart a boarddo it because they decide it's time.
It's way more common to be asked, it'snot always necessarily a negative thing,
(24:43):
but many board members, while they mayexperience some of what you're saying,
don't have the self-awareness to processit and go and say, "I'm leaving the
board, or it's time for me to leave."
So, in those instances, let's talkabout how to offboard people, because
one of the things we've talkedabout a lot is it is the single most
(25:06):
difficult thing, and many boardsdon't do it well, and they avoid it.
I mean, one reason that boards don'tchange board members is they don't want
to deal with the offboarding, whichis a bad reason to do it, but we all
understand that it can be difficultif you haven't put the right things
in play to set it up for an exit.
So, talk about what you've doneas a chair, what you've done as an
(25:30):
owner to make sure that the board isrefreshed, and how do you deal with
the board members that need to leave.
So, when you have the opportunity, thebest possible thing you can do to prevent
problems is, "Okay, we've just formedthis board, or we've just put all of
you folks on the board. We're all newtogether. One of the key aspects of this
(25:55):
is we do an annual board effectivenessevaluation of the interaction of the
board, both the board dynamics, andwe'll call it the board operations."
Yeah, that's pretty easy to do, right?
It doesn't get into emotional stuff.
"Oh, by the way, the other thingthat we do is peer evaluation."
Mm.
That's when it gets a little sensitive,and in a privately held company business,
(26:20):
it's, I think, easier to do peerevaluations than the SEC requirements for
public company boards, because that's awhole another level and we're not going
to talk about that today, fortunately.
So, I think if you set it up theright way, it makes it a lot easier
to provide ongoing feedback, andyou kind of have to do it in parts.
(26:46):
You sort of have to start withthe board effectiveness piece, and
in my opinion, in my experience,then you add the peer evaluation
onto it.
But of course then I know, Joe, you'regoing to ask me the question, "Well, what
happens if the peer evaluation is horribleto one board member?" Well then, the
lead independent director and the chair,or the governance chair and the board
(27:10):
chair, some combination of those positionshas to have the guts and the cajones as
such to speak nicely with that director,and this isn't a job in this particular
case, you don't give a board member aperformance improvement plan and evaluate
(27:35):
them in three months through six months
because you only see each otherfour or five times a year.
Hmm.
And so, I think that this is oneof those answers where it depends.
So, it does depend on theboard member in question here.
Is this something that the entireboard has known for a year, two
(27:55):
years, like they're not performing.
They've PO'd a bunch of other people onthe board and perhaps the management team,
then you have to make the timing decision.
But anyone who's on a board is amature executive, theoretically.
No, no, no.
Well then, that's a different problemwith how people are selected for boards.
(28:18):
That is true.
Theoretically, should all be matureexecutives, experienced, and so
everyone at some point or another intheir career has had, we'll call it
negative feedback, and that's whatthis is, but the issue is like who
has the guts to do that on a board?
(28:39):
And how do you deliver it soit doesn't feel so negative,
I would say is part of it.
I mean, it may be a result that theboard member doesn't want or doesn't
want to hear about it, but I thinkone of the things we talked about
when we spoke a couple of weeksago, or actually several weeks ago,
was you want to do it with respect,obviously, and hopefully walk away
(28:59):
with as good a reaction as you can get.
And that's not easy.
No, it isn't easy.
There are a couple kindof ways to do this.
One is you speak to the person andsay, "After the next board meeting,
that'll be your last board meeting,but we're going to have a celebration.
All of your service at that meeting,you know, it's time for you to move on.
(29:20):
You've been on the board X years, andso thank you for your service," and you
make a big deal out of it at the boardmeeting or a successive board meeting.
It depends on the timingof all that stuff.
So, that's the best way, almost like aretirement, and you position it that way.
Everyone on the board knows why thisperson is going, but everyone plays
(29:47):
nice on a team and says thank you.
That sounds like it could feel a littledisingenuous when it's happening.
Oh, it does.
I've been on a board where we didnot a yearend, we didn't renew a
board member's term for next year,but we had a nice little kind of.
I'll add that there is another veryimportant scenario where people would
be offboarded and the scenario hasnothing to do with performance, and it
(30:10):
has everything to do with the company'sneeds evolving and the board members'
skills being no longer relevant.
I think for that scenario,the party would be great.
And the conversation is a heckof a lot easier in that scenario.
I'll give you another scenario.
We brought this gentleman onto theboard, had the exact background, like
(30:34):
everything on the board spec checked out.
We were all excited.
The first meeting, he attempts to takeit over and made a comment like, "Well,
you know, I want to understand morefrom the shareholder and executive
perspective." "Well, I'm sorry.
The rest of us have been onthis board for a long time.
(30:56):
You really need to understandthe independent director
experience and perspective."
Mm.
Then we're on a call and he sayssomething totally inappropriate,
I don't remember what it was.
By the way, I'm non-govchair for this board.
So, I called the chair after our call.
(31:16):
I'm like, "This isn't working.
He's like the smartest guy in the room."We gave him a term called the "lord of
the board," and I had the true pleasureof calling the lord and saying, "Look, you
know, thanks very much for your service onthis call and meeting, but it is just not
(31:38):
working out from a cultural standpoint."He was livid like he was yelling.
But you know something, you saved everyonea lot of heartache in the next year,
two years, three years, going throughboard meetings with someone that the
whole room doesn't want in the room.
You can tell right away, it was soclear, and the board had been together
(32:01):
a while before this person came on.
Lynn, it's been great speaking with you.
Thanks so much for joiningus today On Boards.
Thank you very much for inviting me.
I've learned, and have beenreminded of a variety of things
because of your questions.
Thank you, and thank you all for listeningto On Boards with our guest, Lynn Clarke.
(32:25):
Please visit our websiteat OnBoardsPodcast.com.
That's OnBoardsPodcast.com.
We'd love to hear your comments,suggestions, and feedback.
If you're not already a subscriber, pleasebe sure to subscribe at Apple Podcast,
Spotify, or wherever you get your podcast.
And remember to leaveus a five-star review.
(32:46):
And please tune in for thenext episode of On Boards.
Thanks.
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Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!