Topics of Family Business Governance: Insights on Structures, Strategies, and Executives 3030580180, 9783030580186

Table of contents :
Preface
Contents
About the Authors
Part I: The Design of Boards for Comprehensive Tasks and Efficient Processes
Introduction
Exploring the Topics of Governance
Bibliography
Modules and Tasks of Governance
1 The Relevance
2 Statutory Rights and Obligations for Processes Which Are Based on Law or Shareholder Agreements
3 Monitoring the Activities of the Leadership and the Development of the Company
3.1 Monitoring as the Right to Ask for Reports
3.2 Monitoring the Situation the Company Is in and Its Development
3.3 Monitoring the Compliance
3.4 Monitoring the Performance of the Management and Evaluating the Fit Between Person and Task
3.5 Monitoring Leads to Structuring the Processes of the Ones Who Report
4 Directing the Management
4.1 Outright Instruction
4.2 Authority to Approve or Reject Proposed Decisions
4.3 Conflict Resolution in Case of Disagreements Among the Direct Reports
5 The Instruments of Indirect Leadership
5.1 Self-Steering
5.2 Cooperative Opinion-Forming
5.3 Context-Based Steering
5.4 The Competence-Based Versus the Authority-Based Governance Functions
5.5 Advisory
Bibliography
One-Tier and Two-Tier Boards
1 The Relevance
2 The Basic Design
3 Some of the Arguments
4 Atmosphere
Bibliography
Design Parameters of a Board for Family Enterprises
1 Variety of Basic Designs
2 A Checklist
Bibliography
Governance for the Lone Founder
1 The Relevance
2 The Need
3 The Implementation
4 The Role of the Chairman
Bibliography
Agenda Setting: Clarifying the Strategic Situation and the Challenges
1 The Relevance
2 Timeframe
3 Categories of Agenda Items
4 Overview of Events Since the Last Session
5 General Review of All Important Topics: Not Only the Urgent Ones
6 Emphasizing the Urgent Needs Too
Bibliography
Monitoring: We Need Meaningful Data
1 The Relevance
2 Too Much and Too Detailed Data Without Verbal Explanation
3 Focus Primarily on Budget Comparisons
4 Unconsolidated Data
5 Changing the Organization Structure or the Business Year or any Similar Basic Structure
6 Intransparent Accruals and Intra-Year Adjustments
7 Insufficient Time Frames
8 Too Much Focus on Effects Only and Neglecting the Causes
9 Too Much Focus on the Average and Neglecting the Span of Deviations from Average
10 Too Much Focus on Costs and Neglecting the Price Quality
11 Not Drilling Down to the Details but Revealing the Essentials
Bibliography
The Difficult Task of Advising
1 The Task of Advising
2 The Advisory Role of a Board
3 The Importance of Advice
4 Advising Implies Searching for Solutions
5 Some Prerequisites for Successful Advising
5.1 Curiosity
5.2 Competence
5.3 Independence Without Prejudice
5.4 Competence in Communication
5.5 Time for Reflection
6 From Deliberation to Resolution
7 Consulting as an Integral Part Between Supervision and Control
Bibliography
To Create a Sense of Urgency
1 The Relevance
2 The Problem
3 Tools for Setting Priorities
4 Good Times as Warning Signal
Bibliography
The Board´s Key Role During a Crisis: Such as COVID-19
1 The Challenge
2 First Things First: Setting the Frame
2.1 Duration and Extent
2.2 Business Model
2.3 Stakeholder Philosophy
3 Ensuring Sufficient and Effective Processes
4 Monitoring and Driving Progress
5 Communication
6 Worth Remembering
6.1 Check Your Biases
6.2 Encourage Candor
6.3 Consider a Full Stop
6.4 Be Encouraging
Bibliography
Part II: The Board´s Discussions on Topics of Family Enterprises´ Strategies
The Key Issues of the Family Enterprise´s Strategy
1 The Key Question
2 Are We Up to Driving the Strategic Development of a Company Forward?
3 What Is Our Business Model, Which Are the Profit Sources, and What Do the Financial Implications Look Like?
4 What Is the Significance of Volume?
5 What Could Lead to the Ruin of the Business Model?
6 Which Other Threats Must Be Avoided at All Cost?
7 What Kind of Financial Structure Does the Company Need?
8 How Much Must the Company Earn?
9 How Much of the Profit Can Be Distributed?
10 How Much and Where Does the Company Need to Seek Growth?
11 How Is the Dilemma Between Dynamic Development and Stability Solved?
12 Which Transcending Business Interests Do Shareholders Hold and How Can They Be Taken into Account?
13 Standards Can Be Developed for Many Strategic Issues
14 Strategy Work Requires Ongoing Communication
Further Reading
Profits as the Basis of Strategy
1 A Mandatory Agenda Point
2 A Key Maxime: Profit by Avoiding Losses
3 Profits Are Results, Find Out the Causes
4 Profits Through Good Prices
5 Profits Through Continuous Productivity Improvement
6 Assessing the Viable Range of Profitability
7 Assessing the Required Level of Profitability
8 Deploy Extraordinary Profits
Bibliography
Investments Strategy for Stability and Development
1 The All-Time Relevance
2 Phase-Specific Strategies
2.1 Investment Strategy in the Early Phase
2.2 Investment Strategy During Steady Development
2.3 Investment Strategy for Continued Growth
2.4 Investment Strategy During Recession
2.5 Investment Strategy in Stagnating Industries
3 Conclusion
Innovation Strategy for Renewal and Growth
1 The Relevance
2 The Steps in Governance of Innovation
2.1 First Step: Agenda-Setting
2.2 Second Step: Reviewing the Situation and Monitoring the Development
2.3 Third Step: Forming an Encouraging Policy Regarding the Innovation Work
2.4 Fourth Step: Sharing Real-Life Experiences
2.5 Fifth Step: Pruning the Portfolio
2.6 Sixth Step: If Nothing Needs to Be Changed, Start an Innovation Project Anyway
Bibliography
Patterns of Family Enterprise´s Growth
1 The Phenomenon
2 The Rare No-Growth-Requirement
3 An Upper Growth Limit After the First Generation
4 A Lower Growth Limit
5 Four Factors Are Essential for Supporting Sustainable Growth
5.1 Need
5.2 Options
5.3 Capabilities
5.4 Willingness
6 From Enterprise to Entrepreneurship: Reintegrating Entrepreneurship
Bibliography
Avoiding Unacceptable Risks
1 The Relevance
2 The Continuous Deterioration
3 The Big Mistake
4 The Accidents
Bibliography
Compliance and Environmental Protection: CSR in Family Enterprises
Recession Management for Coping with Economic Cycles
Bibliography
Fighting Financial Squeeze
The Trade-Offs of Mergers and Acquisitions
1 The Relevance
2 Profitability
3 Financial Affordability
4 Trade-Offs and Risks
5 The Summary
Bibliography
The Trade-Offs of Going Public of Family Enterprises
1 The Relevance
2 Trade-Off Between ``Independence´´ and ``Motives for External Financing´´
3 The Motives for Going Public
Bibliography
Profit Distribution Policy in Family Enterprises
1 The Relevance
2 Distributable Return of Financial Investments
3 Impact Factors on Distribution Policy
4 Summary: Simple Rules as a Guideline
Bibliography
Part III: The Development of Professional Owners and Capable Executives in Family Enterprises
Developing Responsible Owners in Family Business
1 The Relevance
2 The Responsibilities and Professionalism of Family Shareholders
2.1 Educational Milestones
2.2 Developing Self-Esteem
2.3 Shared Values and Family Culture
2.4 Specific Training
3 Conclusion
Bibliography
Development of Executives in Family Enterprises
1 The Relevance
2 The Elements of a Comprehensive Succession Plan
2.1 Planning Scenarios
2.2 Defining and Anticipating the Need to Fill Key Positions (Pull Principle)
2.3 Identifying Candidates and Their Development Needs (Push Principle)
2.4 Developing Future Executives
3 Summary
Bibliography
Challenges and Benefits of Sibling-Consortium in Management of Family Enterprises
1 The Basic Patterns in Historical Development
2 The Argument in Favor of a Sibling-Consortium
Preparation for Succession in Family Enterprises
1 The Relevance
2 Mandatory Requirement: Passion for the Business
3 Crucial Learnings
4 Learning to Work
5 Learning to Lead
6 Learning ``Size´´
7 Learning to Take Responsibility
8 Learning ``Foreign Countries´´
9 Learning the Trade
10 Learning About the Style and the Stakeholders
11 Not ``Coming Home Too Early´´
12 Personality
13 A Mentor
14 Conclusion: Clarity About Timing
The Challenges and Benefits of Non-family Management in Family Enterprises
1 The Relevance
2 The Prerequisites
3 Professionalism
4 The Benefits of Governance for the Executive and the Owners
Professional Executive Search for Family Enterprises
Bibliography
The Trade-Offs of Incentive Programs in Family Enterprises
1 The Relevance
2 The Patterns of Incentive Schemes
3 The Trade-Offs
4 Some Maxims
The Family Is the Destiny of the Enterprise