Improving information flows within a complex holding group
GOVERNANCE
Context
A family holdings board overseeing a diversified conglomerate was struggling with the quality and consistency of the information informing its decisions. Much of the board’s discussion relied on historical, personal experience within the group companies, snippets of conversations with their executives, or second-hand information from other family members outside the boardroom. Recognising the limitations of this approach, the board aimed to adopt a more institutional model of reporting model.
Work
Our partner’s first step was to clarify governance responsibilities at each level of the holdings structure. With clear boundaries in place, each forum would be able to focus on the information needed to inform its decision-making – without overstepping its mandate or drifting towards micromanagement.
The holding board shifted its focus towards value metrics for each business, with particular attention to cash flow generation and the thesis behind reinvestment decisions. This required the development of a standardised control panel, enabling consistent, like-for-like comparisons across the diverse portfolio of businesses. Key value drivers were highlighted, supported by operational status reporting that used a “red flag” system to identify where further board intervention might be needed.
At a higher level, the Owners’ Council – meeting less frequently – was provided with a set of higher-level metrics and reports. These focused primarily on projected dividends, risk metrics and capital growth expectations.
Impact
With roles defined more clearly, the reporting received by each board could better match its purpose. Discussions became more strategic, supported by timely and relevant data, while operational matters remained with the business boards. Family stakeholders inside and out of governance became more confident, knowing that decisions were being taken on the basis of more appropriate information.