Author(s) :

Gonzalo Jiménez-Seminario.

Volume/Issue :

Abstract :

The purpose of this note is reflecting on ways boards of directors can renovate their work practices and specially, deal with decision-making in contexts of uncertainty à la Knight (1921) . This implies confronting circumstances beyond business-as-usual. I do this from a scholar-practitioner’s perspective, under the precept that there is nothing as practical as a good theory. I discuss and examine several potential contributions to tackle such challenges, and then I attempt to combine them in an integrative framework. Initially, I review board design by Jay Lorsch and colleagues. Next, I explore best practices originally proposed by Chait, Ryan & Taylor (2005)’s Governance as Leadership for professionalizing the work of non-profits boards and I explore its potential extension to the corporate world.

No. of Downloads :

56

KEYWORDS:

Corporate Governance, Fiduciary, Strategic, Generative, Latin America, Emerging Markets, Family Business, Social Organizations

INTRODUCTION & OBJECTIVES:

As a scholar-practitioner and insider of board work, alongside my PROTEUS consulting team, I frequently struggle with the challenge of helping to professionalize the corporate governance of diverse firms and institutions. Most are large and medium sized family-owned firms and family offices, including multi-business-cum multinational family business groups. Whilst some are cooperatives, mutual societies, trade associations, chambers of commerce, foundations, and incubators, a few are start-ups looking to set up their first board. Although the large majority are Latin American, others family groups are from North America and Europe, and a few ones from the Middle East, and increasingly from Asia (specifically, India and Japan). I will focus here on the most frequent cases: family business groups planning generational succession processes from first to second or second to third generation (third to fourth in Europe and fourth and beyond generations in Asia). The usual process starts by recognizing who are the “designated equity successors”, normally the children receiving regularly equal percentage of ownership, irrespective of their day job or gender. The engagement moves next to designing -through conversation, discussion, and negotiation- rules of engagement among family partners, who need to learn how to work together as co-owners, that is, going through the rite of passage to become actual partners from their previous life, in which they were just brothers or cousins. This process often requires clearing past emotional liabilities, compensating -or at least recognizing and accepting- historical differences. But the crux of a representative project is tracing a roadmap to co-construct a shared purpose and a common vision and the underlying main organizational goals. Having gone through the previous processes, the critical next step-into-action becomes establishing an effective board of directors : designing the board structure, size, functions, composition, processes, and begin getting familiar with good governing practices. The design model we tend to follow is adapted from the one suggested by Harvard’s Jay Lorsch (see figure 1) and flows from making sense of the owners’ background, the company situation, and its challenges. From there, we can begin designing structure, composition and begin thinking about instilling best practices onto the emerging governance bodies.

DOI:

10.58426/cgi.v4.i1.2022.1-12