What Boardrooms Can Learn from the Success of Family Firms
[Editor’s note: the following article was written by David Beatty and Matt Fullbrook and published on The Globe and Mail web site]
One of the most valuable and enduring outcomes of the global financial crisis – not to mention the major corporate blowups of the early 2000s – has been the elevation of corporate governance to a daily topic of conversation.
A combination of regulation, pressure from stakeholders and plain common sense has led to dramatic evolution in Canadian boardrooms. Directors are more independent, professional and accountable than ever. The slightest slip-up can land a CEO or board on the front page. Shareholder democracy has evolved dramatically with the introduction of majority voting, “say on pay” and now the emergence of proxy access.
Beneath this progress is an underlying assumption that the paragon of good governance is to be found among large, publicly listed and widely held corporations. This group is nearly always the first to adopt cutting-edge best practices; they consistently lead the way in public transparency. In this assumption, we often relegate corporations that don’t fit the mould to the status of second-class citizens.
Controlled corporations, especially those that are family controlled, form the bulk of this lower class and are usually dismissed in conversations about good governance. When was the last time a board was complimented for having fewer independent members, or a company was praised for its dual class share structure?