Post on 18-Dec-2015
transcript
Guido Corbetta Chair AIdAF-EY of Strategic Management in Family Business
In memory of Alberto Falck
Helsinki, 19th September 2014
Governance for Long-lasting Family Businesses
Ownership stage
Founder
Second generation
Cousin consortium
Entrepreneurial family
Board of Directors
Shareholders’ agreements
Family meetings
Family protocol
Family foundation
Family office
Family council
A dynamic vision of family and corporate governance
Corporate governance activity
Ownership organization (Family holding)
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Corporate Governance as a system
The successful governance of a company is a system of “actors” (and processes):
• Shareholders’ assembly• Board of Directors• Chairman • CEO• Committees of the Board (Executive, Audit,
Human Resources, …)
Legal context and group structure are relevant- 3 -
Models of Boards of Directors
Directors’ competencies
High
Low
Role of the Board within the decision process
Limited Relevant
B.o.D in transformation
Governing B.o.D
Useless B.o.D
Dangerous B.o.D
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Roles of Boards of Directors
The Board of Directors doesn’t have direct managerial tasks, but governing tasks which may be aggregated into
legal role strategic role
In a “governing” Board of Directors it is necessary to develop both roles
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The outside directors
It is difficult (or impossible ?) to organize a “governing” Board of Directors without outside directors who can be:
Affiliated (friends, ex managers, …)
Unaffiliated or independent
Outside members can support the company and the owning family
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The roles of outside directors for the company
to stimulate self-discipline and a sense of responsibility
to promote the introduction of reporting tools more sophisticated and connected to management performance
to monitor potential confllicts of interest
to secure minorities’ interests
to secure other stakeholders’interests
In terms of control:
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to acquire new experiences and competencies
to have stimulating counterparts during the formulation of goals and strategies
to improve the quality of the decision making process through deep-reaching questions
to improve the quality of people evaluation processes
to improve relations among other stakeholders and the business
to improve the reputation of the company
In terms of strategy
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The roles of outside directors for the company
Outside directors can complete the skills
missing from the board (1/2)
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According to directors of family-owned and non-family-owned businesses:
Source: Boris Groysberg and Deborah Bell
Are there skills missing or insufficiently represented on this board?
Is there a formal process of determining what skills are required for the board and, therefore, for new directors?
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Source: Boris Groysberg and Deborah Bell
What are the skills missing from boards?
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Outside directors can complete the skills
missing from the board (2/2)
The roles of third parties for the family
Third parties unaffiliated of the owning family are very useful for family governance because they help: to define the right rules in the relations among the
company and the family to plan in a professional way the succession process to manage some “strategic traps” that may happen
because of the entrepreneur getting older to manage with less emotional bias the tensions
which may arise among family shareholders, managers and non managers
to train successors- 11 -
Zegna case:corporate governance
Board Governance:
Four “independent” Board members out of 8, with age limit rule
Audit Committee and Compensation Committee
Group Governance:
Executive Committee: top management, of which one third is foreign, meets 4 times per year
Zegna Convention: all worldwide executives meet 2 times a year (of which one at our Milan Headquarters) - 12 -
Zegna case:family governance
Entry of the next generation:
Admission rules tied to education, competence and
passion: university degree, foreign languages and
work experience in other companies for at least 3
years
Young Generation Committee: meets twice a year
under the guidance of our Chairman Paolo Zegna and
with the presence of experts in Family Business to
move the fifth generation towards the Group.
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De Agostini case: family governance
(1/2)
The Assembly of the shareholders has approved the “Rules for the IV generation”. According to these rules, members of this generation could have different roles:
Managers: a candidate must reach some significant results in the managerial career outside, before entering in the Group
Part time employees: each branch of the family can candidate two members for part time employment
Suppliers or consultants of the companies of the Group (with some limitations).
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To prepare all the members of the IV generation to their ownership responsibilities, a Committee IV Generation has been established.The Committee is composed by 8 members of the IV generation (4 olders and 4 youngers) and organizes actvities for all the members of the IV generation.
An Implementation Committee is in charge of all the development process of the IV generation. The Committee is composed by the Chairman of the Group, the Vice Chairman in charge of the relationships with the owners, the non family CEO, the head of the Committee IV Generation, three consultants expert in family business and in head hunting. - 15 -
De Agostini case: family governance
(2/2)
Pay attention !
Before asking an outsider to join it is useful to get to know each other
a balanced person
independent in his/her judgments
motivated
morally upright
with experiences in family business
used to working in businesses of
larger size
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