Governance in Family Enterprises: Maximising Economic and Emotional Success

Governance in Family Enterprises: Maximising Economic and Emotional Success

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Governance in Family Enterprises: Maximising Economic and Emotional Success by A. Koeberle-Schmid, D. Kenyon-Rouvinez, E. Poza, INOGUCHI

Presents a comprehensive overview of governance in family enterprises including practical management knowledge in easy-to-use frameworks and interviews with renowned family enterprise owners and managers. Readers will benefit from the book's systematic approach and the opportunity to learn from the experience of other family enterprises.

Product Details

ISBN-13: 9781349451395
Publisher: Palgrave Macmillan UK
Publication date: 01/01/2014
Edition description: 1st ed. 2014
Pages: 272
Product dimensions: 5.51(w) x 8.50(h) x (d)

About the Author

Dr Alexander Koeberle-Schmid is an economist from a business-owning family. He wrote his PhD about boards of directors and family councils in family enterprises. Alexander is a family business advisor, who has worked for renowned consulting and family business advisory firms. He advises owner families of medium-sized to large multinational family enterprises in owner strategic issues such as governance structures, management succession, boards of directors, family councils, family offices, family philanthropy, and family constitutions. He has worked as a commercial mediator, was non-executive board member of a medium-sized family enterprise, and is in frequent demand as a speaker and lecturer.

Denise Kenyon-Rouvinez, PhD, is the Wild Group Professor of Family Business and co-director of the Global Family Business Center at IMD, Switzerland. For nearly 20 years Denise has worked extensively with very large family businesses in Asia, the Middle East, Europe, North and South America and is used to deal with complex governance and wealth situations. Her key areas of expertise are governance, succession, liquidity events, ownership, wealth and philanthropy. Denise is also a certified coach working with the Solution Focused Coaching approach (based on brief therapies and positive psychology) and an accredited Lifo® Licensee. She has written several books and articles on family businesses and has received several awards for her research work.

Ernesto J. Poza is an internationally recognized, top-rated speaker and consultant to family-owned businesses. He is Clinical Professor of Global Entrepreneurship and Family Enterprise at the Thunderbird School of Global Management. He is founder of E. J. Poza Associates, a consulting firm that has assisted family businesses in their continuity efforts for the past 25 years. He has written seven books and editions and over 50 articles in professional journals and been quoted in periodicals, including the Financial Times, Business Week, the Wall Street Journal, and the New York Times. He has researched the unique competitive advantages of family-owned companies on a global basis, generational transfers, patterns of sustainability in centennial family companies and best practices in governing the family–enterprise relationship.

Table of Contents

List of figures x

Preface xiii

Part I Structures for Family and Business: Family Business Governance 1

Chapter 1 Maximizing Success through Professional Family Business Governance Alexander Koeberle-Schmid 3

Interview: Dr. Jürgen Heraeus, chairman, Heraeus Holding, Germany 3

Family enterprises are special 7

Sound family business governance 9

Best-practice recommendations 16

Important definitions 17

Chapter 2 Challenges to the Governance of the Family Enterprise Ernesto J. Poza 20

Interview: Mr. Bruce T. Halle, chairman, Discount Tire, USA 20

Family business governance is critically important 25

Challenges to family business governance 25

Which hat to wear: parent, owner, or CEO? 32

Simultaneous optimization of family-ownership and business 33

Best-practice recommendations 35

Chapter 3 Evolution of Governance Structures and Systems Ernesto J. Poza 36

Interview: Julio Cazorla, managing director, family office, Grupo Landon, Spain 36

Evolution and sustainability 42

Effective governance is more than just structures 43

The long term 45

Evolution by design 48

The founder exits; a family office is started 50

The family assembly 52

The annual general meeting 52

Best-practice recommendations 54

Chapter 4 Responsible Ownership in Family Enterprises Denise Kenyon-Rouvinez 56

Interview: Franz M. Haniel, chairman of the board of directors, Haniel, Germany 56

Interview: Karl-Erivan W. Haub, chief executive officer, and Christian Haub, chief family officer and CFO, Tengelmann, Germany and USA 60

Being a responsible owner of a family enterprise 63

What does responsible ownership mean? 63

Owners' rights and duties 66

Tasks of responsible owners 68

Types of ownership 69

Best-practice recommendations 74

Part II Structures for the Business: Business Governance 77

Chapter 5 Professional Board of Directors Alexander Koeberle-Schmid 79

Interview: Bettina Würth, chairwoman, Würth Group, Germany 79

Different boards for different family enterprises 83

Why establish a board of directors? 84

A four-step model for a professional board of directors 86

Step 1 The benefits of a professional board 87

Step 2 Tasks of a professional board 88

Step 3 Contingent factors 93

Step 4 Evaluation 98

Best-practice recommendations 100

Chapter 6 CEOs and CEO Succession Denise Kenyon-Rouvinez 101

Interview: Henri van Eeghen, COO Cordaid, and Tini Hooymans, former nonfamily director on the board of the van Eeghen Group, both The Netherlands 101

Identifying the right CEO and grooming his her successor 107

Managing the family business: why is it different? 108

A family CEO versus a nonfamily CEO: opting for competence 111

The succession process 115

Grooming the next CEO 115

Thinking outside the box: considering alternative leadership patterns 119

Best-practice recommendations 120

Chapter 7 The Benefits of Control Instruments and Control Systems Denise Kenyan Rouvinez 121

Interview: A. Vellayan, executive chairman, Murugappa Group, India 121

Control instruments and systems 126

Control 126

External audit 127

Internal audit 129

Risk management 131

Compliance 135

Reports 136

Best-practice recommendations 140

Part III Structures for the Family: Family Governance 141

Chapter 8 Family Councils and Chief Family Officers Ernesto J. Poza 143

Interview: Maria Luisa Ferré Rangel, chairperson, Grupo Ferré Rangel, Puerto Rico 143

The family council's contribution to family governance 148

The family council as a strategic body 150

Ownership and family policy-making 152

Family dynamics 154

Conflict resolution and the family council 155

The chief family officer 157

Boundaries between the board and the family council 157

Best-practice recommendations 160

Chapter 9 Family Philanthropy and the Family Philanthropic Foundation Denise Kenyon-Rouvinez 161

Interview: Rina Lopez Bautista, president and executive director, The Knowledge Channel, the Philippines 161

The benefits of family philanthropy 166

Giving 166

The structure and organization needed for effective giving 172

The people involved in giving 175

Best-practice recommendations 178

Chapter 10 The Family Office, Wealth, and Wealth Management Denise Kenyon-Rouvinez 179

Interview: Dirk Jungé, Pitcairn, USA and Alex Scott, SandAire, UK 179

The family office 185

Understanding wealth and the impact of wealth 185

Wealth management 187

The family office 187

Structuring and managing the family office 189

Grooming the next generation of responsible stewards of wealth 191

Best-practice recommendations 194

Part IV Documentation of Governance Structures: Constitution 195

Chapter 11 Developing Governance with the Help of a Governance Code Alexander Koeberle-Schmid 197

Interview: Dr. Rheinhard Zinkann, managing director, Miele, Germany 197

A governance code for family enterprises? 201

Goals and functioning of governance codes for family enterprises 202

Quality requirements for codes for family enterprises 204

The development of governance in a family enterprise 207

Best-practice recommendations 208

The German Governance Code for Family Enterprises 209

Chapter 12 A Family Constitution for Business-Owning Families - Process and Document Alexander Koeberle-Schmid 222

Interview: Dania Besher, board member, Mac Investments, Egypt 222

A family constitution: why? or why not? 227

Limitations of family constitutions 228

Family constitutions in family enterprises 229

Developing a family constitution 230

Best-practice recommendations 234

Example of a family constitution 235

Chapter 13 The Future of Family Business Governance Alexander Koeberle-Schmid Denise Kenyon-Rouvinez Ernesto J. Poza 244

Interview: Sophie Lammerant Velge, Bekaert, Belgium 244

Future challenges for family businesses 249

Governance as evolution 251

Generosity: an abiding characteristic 257

Notes and References 258

About the Authors 270

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