ILMA Compoundings August 2016 - 33

FAMILY BUSINESS

What do These Cases Tell Us?
Following in the footsteps of a founder, most sibling business
families tend to opt for a single CEO/chair. However, the four
sibling brothers most wanted a strong unified bond between
themselves, and they worried about their ability to do so if one
brother was CEO, the chairman and the only shareholder on
the board. They also wanted objective input on key business
decisions and strategy. They considered board membership
inappropriate for the three who worked in the business and
reported to their brother the CEO. Their decision to appoint
an independent as chair allowed them to keep their trust of
one another high and to focus on their roles as a team of
shareholders and managers in the business and worry less about
monitoring the CEO.
In the second case, the cousins would be expected to separate
the chair and CEO roles in order to fully assure shareholders
that their assets were being put to the best use by management,
and as a compromise for not including shareholders on the
board. Further, it is reasonable to expect the vigilant cousins,
adding independent directors to their board for the first time,
would opt for a chair who would concentrate on the new
governance function. It might be too much and too distracting
to a CEO's job of running the business. However, the family
shareholders had experienced high trust in management
for three generations and they fully supported an efficient
governance/management relationship, which would also
provide oversight. Thus, they opted to preserve as much of
the governance and management structure that had worked in
the past, knowing it would be significantly enhanced with the
addition of independent directors, which would further add to
high trust in the fourth generation.

* If a business's agility can be enhanced by an individual who
can skillfully perform the duties of CEO and chair while
maintaining shareholder trust, consider taking advantage of
the combined roles.
* Don't adopt the "best practice" or "good corporate
governance" solution for your circumstances too quickly
without a challenge. A counterintuitive solution may be the
best practice for your business family.

McClure is a principal of the Family Business Consulting Group,
where his work often involves family and nonfamily employee
teamwork, advisory boards or boards of directors implementation,
family councils, successor development and management practices
tailored to family firms. He may be reached at 208-342-7775 or
mcclure@thefbcg.com.

Both firms looked at their unique circumstances and chose what
would work best for them, rather than adopting what might be
traditional or would work for another business family.

Conclusions
In summary, family firms who are led by a family member might
consider the following when deciding to combine or separate
the roles of CEO and chairman:
* Deliberately question it. Don't blindly follow tradition
and adopt what worked in the previous generation. Each
transition is an opportunity to evaluate both options.
* If shareholders need more confidence and it will help
increase trust and alignment, consider the potential of
separating the roles so a chair can focus on the effectiveness
of the board, and the CEO can focus on the business.

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© 2016 Calumet Specialty Products Partners, L.P.

Compoundings August 2016 * 33 * Vol. 66 No. 8


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ILMA Compoundings August 2016

Table of Contents for the Digital Edition of ILMA Compoundings August 2016

FROM THE CEO
FROM THE PRESIDENT
BOARD BRIEF
NOTES FROM NLGI
THE HEART OF ILMA
In Memoriam Mike Ryterski (1920–2016)
Radco Industries Promotes Brian Finch
Manufacturing Day is Coming! October 7, 2016
THE EVOLUTION OF GROUP II
VOICES & VIEWS
INTERNATIONAL INSIGHT
FOCUS ON ETHICS
FAMILY BUSINESS
RULES & REGS
POWER PLAY
LEGAL EASE Preparing for Brexit
THE WHITE PAPER
ILMA Compoundings August 2016 - 1
ILMA Compoundings August 2016 - 2
ILMA Compoundings August 2016 - 3
ILMA Compoundings August 2016 - 4
ILMA Compoundings August 2016 - FROM THE CEO
ILMA Compoundings August 2016 - 6
ILMA Compoundings August 2016 - 7
ILMA Compoundings August 2016 - 8
ILMA Compoundings August 2016 - FROM THE PRESIDENT
ILMA Compoundings August 2016 - BOARD BRIEF
ILMA Compoundings August 2016 - 11
ILMA Compoundings August 2016 - NOTES FROM NLGI
ILMA Compoundings August 2016 - THE HEART OF ILMA
ILMA Compoundings August 2016 - 14
ILMA Compoundings August 2016 - In Memoriam Mike Ryterski (1920–2016)
ILMA Compoundings August 2016 - Radco Industries Promotes Brian Finch
ILMA Compoundings August 2016 - 17
ILMA Compoundings August 2016 - Manufacturing Day is Coming! October 7, 2016
ILMA Compoundings August 2016 - 19
ILMA Compoundings August 2016 - 20
ILMA Compoundings August 2016 - THE EVOLUTION OF GROUP II
ILMA Compoundings August 2016 - 22
ILMA Compoundings August 2016 - VOICES & VIEWS
ILMA Compoundings August 2016 - 24
ILMA Compoundings August 2016 - 25
ILMA Compoundings August 2016 - 26
ILMA Compoundings August 2016 - INTERNATIONAL INSIGHT
ILMA Compoundings August 2016 - 28
ILMA Compoundings August 2016 - FOCUS ON ETHICS
ILMA Compoundings August 2016 - 30
ILMA Compoundings August 2016 - FAMILY BUSINESS
ILMA Compoundings August 2016 - 32
ILMA Compoundings August 2016 - 33
ILMA Compoundings August 2016 - RULES & REGS
ILMA Compoundings August 2016 - 35
ILMA Compoundings August 2016 - POWER PLAY
ILMA Compoundings August 2016 - 37
ILMA Compoundings August 2016 - LEGAL EASE Preparing for Brexit
ILMA Compoundings August 2016 - 39
ILMA Compoundings August 2016 - THE WHITE PAPER
ILMA Compoundings August 2016 - 41
ILMA Compoundings August 2016 - 42
ILMA Compoundings August 2016 - 43
ILMA Compoundings August 2016 - 44
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