In Emerging Markets Business, Egon Zehnder’s Sonny Iqbal and Richard Stark offer their perspective on the case of a Chilean family business spanning four generations which is struggling today with the governance of the company and how to professionalize it’s board. Iqbal and Stark assert that while acknowledging the need to professionalize the board is a first step for a legacy family business, more action is required. “Non-family executives bring additional knowledge of best practices and a range of perspectives and experience that allow family firms to grow and stay competitive with non-family companies,” they said. Before a family business adds independent directors, however, it is important to assess the current state of the board and identify areas where governance might need to be strengthened. Failing to do so, sets the new members up for failure and will make the experience a frustrating one for all involved. Iqbal and Stark’s recommendation for the Chilean family business calls leadership to pay particular attention to composition, culture and process for an independent board. In closing, the consultants contend that while there is no doubt that adding independent directors to the board of a family company is challenging—it forces the family out of its governance comfort zone and into a higher gear. Precisely for this reason, adding independent directors is one of the most beneficial steps a family board can take.
Full story: A Family Affair in Emerging Markets Business (Summer 2017).