How better governance can drive alignment around financial performance
GOVERNANCE STRUCTURES
Context
A diversified conglomerate with publicly traded shares was under the control of a third-generation family. Over time, a bottom-up operating model had taken hold, where individual business units were managed independently by different family members. As a result, the family holding board lacked a unified vision for the portfolio. Discussions around recent poor performance made it clear that there was little alignment on how to create value in the portfolio.
Work
To address this, we helped move the family holding board towards a strategic role. The first step was to clarify the role of the holding board – specifically, where its responsibilities ended and where those of the individual company boards began.
Working with sub-groups of the holding board members, we provided analytical support to find answers for the key questions each family branch was asking, including:
How could the family engineer a more streamlined governance structure?
Was there scope for higher dividend payouts?
What financial strategies would help the family increase its ownership level?
What changes in the capital allocation strategy were rational and feasible?
Our worked helped the board to engage with these complex issues more constructively and with a commercial mindset, setting aside long-standing family politics.
Impact
Reaching alignment was not straightforward; differing owner priorities made it difficult to agree on a single course of action. However, by taking the time to understand each individual’s interests, concerns, and constraints, we helped the board surface a shared path forward, which is now poised for implementation.