Business owners are often too quick to bring people into ownership or leadership. Someone’s loyal, capable, and—crucially—trusted. But let’s pause on that word. In most businesses, “trusted” really means they won’t run off with the money. That’s important, of course—but not enough.
True trust also means competence: being trusted to think well, decide well, and carry responsibility well. Directors and shareholders operate at a higher level of responsibility and judgement. They influence direction, culture, and governance. Yet many owners, eager to reward effort or share the load, give away titles or shares before discovering how that person performs at that higher, untested level of competence.
Why We Rush Commitment
It’s human nature to crave certainty. As Psychology Today puts it in “Date Before You Marry: What Your Brain Gets Wrong About Commitment”, we often commit early not because we’re sure, but because uncertainty feels uncomfortable.
In business, that same pattern plays out. Owners think:
“I’m overloaded. I need help.”
“They’ve been with me for years; I trust them.”
“Let’s make it official.”
That decision calms anxiety—but it may replace one uncertainty with another.
Once you grant a directorship or issue shares, it’s not easily undone. These are legal relationships, not friendly gestures. Directors carry statutory duties; shareholders have rights that last long after goodwill fades. What was meant to ease pressure can create long-term complexity.
Why “Trusted” Must Mean Competent
In many SMEs, the people owners “trust” most are the ones who’ve been around longest. Or it may be that they’ve been friends forever but not worked together. They’re dependable, loyal, steady. But governance needs more than dependability.
It demands judgement, the ability to think strategically, to challenge assumptions, and to make decisions with imperfect information. Those are skills that can’t be assumed—they must be tested.
So, when we talk about trust, we need to broaden the definition. Trust isn’t only about honesty or loyalty. It’s about competence too. Trust that the individual knows what they’re doing at board level; that they can weigh risk, understand accountability, and act in the company’s best interests—not just their own.
The step up to being a director or shareholder introduces added, and as yet untested, layers of competence. Until someone has demonstrated that they can operate at those levels, giving them authority or equity is a leap of faith.
For more on how thinking habits underpin leadership, see “Five Good Thinking Habits”.
The Staged Approach: Date Before You Marry
Before giving someone a permanent place in your business marriage, give them the chance to “date” the role. Watch how they think, decide, and behave when the stakes are higher.
Observe and Involve
Invite them to attend meetings as a guest or adviser. Let them experience how decisions are made to let you see how they respond to complexity and challenge. Do they listen, question, and contribute constructively—or retreat into silence?
Assign Limited Authority
If that goes well, assign them real but limited responsibility—perhaps leading a key project or overseeing a strategic area. This phase tests how well their strengths scale, and whether they can shift from operational to strategic thinking.
You might introduce conditional equity or profit participation here—so alignment can grow naturally without altering the share register.
Formal Appointment
Only after consistent demonstration of competence and cultural fit should you move to full directorship or shareholding. By that point, both sides know what they’re signing up for. It’s a step forward, not a jump into the unknown.
For a broader view on measured growth and decision-making, see “Snakes and Ladders of Business”.
Why It Matters
A staged approach protects everyone:
- It prevents goodwill from turning into grief. Premature commitments often sour when expectations don’t match reality.
- It preserves stability. Introducing new authority gradually gives culture and relationships time to adjust.
- It ensures ownership is earned, not gifted. Roles and equity become recognition of proven competence, not loyalty alone.
- It builds confidence. The new appointee enters fully prepared, not overwhelmed.
Governance is about stewardship, not sentiment. It’s not unkind to be cautious; it’s professional. The more evidence you build before committing, the less likely you are to need a difficult conversation later.
The Real Cost of Getting It Wrong
Owners often confuse friendship with readiness. “They’ve been with me for years” isn’t the same as “they can make board-level decisions.”
When you appoint too early:
- You dilute control before you know how they’ll use it.
- You create legal and financial entanglements that are hard to reverse.
- You risk damaging personal relationships that were fine before you formalised them. Is the risk of losing a lifelong friend worth it?
Removing a director or reclaiming shares isn’t just messy; it’s emotional. What began as a gesture of trust becomes a test of resilience.
For thoughts on handling uncertainty, see “How to Deal with Turmoil”.
A Practical Framework
If you’re planning to introduce new directors or shareholders:
- Define readiness. What does “board-level competence” look like in your business?
- Map a pathway. Create stages—observer → limited responsibility → formal role.
- Communicate clearly. Explain that this is about development, not doubt.
- Review regularly. Give feedback, check fit, and be willing to pause.
- Commit only when proven. Make the formal step when both parties are confident.
This structure balances transparency and discipline. It turns what might feel like hesitation into a visible development process.
Slowing Down Is Smart Business
Slowing down isn’t about mistrust—it’s about maturity. It’s the difference between giving something away and building something sustainable.
A directorship or shareholding should never be a reward for loyalty alone. It’s a recognition of competence and contribution at the highest level.
Taking time to test fit is not cynicism—it’s stewardship. It gives both parties space to learn, adapt, and grow into the responsibility.
As we’ve written elsewhere in “What Is Enough?”, business success isn’t about accumulation but clarity. Knowing when you know enough—and when you don’t yet—is part of that clarity.
So, before you make your next appointment or issue that next share certificate, ask yourself:
Do I trust this person’s integrity and their competence?
Have I seen them handle responsibility at board level?
Are they ready to own—not just work in—the business?
If not, stay in the “dating” phase a little longer. You’ll both benefit from the experience.
Because in business, as in life, certainty doesn’t come from rushing commitment. It comes from shared experience, tested judgement, and earned trust.
Date before you marry. Your business—and your peace of mind—will thank you for it.
How we can help you
We have been here before and we have all the expertise, including non Executive Board qualifications, to help you create plans that are agile, flexible and resilient, so that you will have confidence that you can to overcome the unexpected, mitigate their effect, or avoid them. We can help you monitor the results, model any changes you want to make, listen and discuss with you the best ways of achieving your goals. My book Understanding the Numbers: Make Your Business and Your Life Better helps you avoid mistakes that lowers business value, that I’ve seen time and time again.