Governance for Long-lasting Family
Businesses
Guido Corbetta
Chair AIdAF-EY of Strategic Management in Family Business
In memory of Alberto Falck
Helsinki, 19th September 2014
A dynamic vision of family and
corporate governance
Ownership
stage
Family office
Entrepreneurial
family
Family foundation
Family council
Cousin
consortium
Family protocol
Family meetings
Second
generation
Shareholders’ agreements
Ownership organization (Family holding)
Founder
Board of Directors
Corporate governance activity
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Corporate Governance as a system
The successful governance of a company is a
system of “actors” (and processes):
• Shareholders’ assembly
• Board of Directors
• Chairman
• CEO
• Committees of the Board (Executive, Audit,
Human Resources, …)
Legal context and group structure are relevant
-3-
Models of Boards of Directors
High
B.o.D in
transformation
Governing
B.o.D
Directors’
competencies
Useless
B.o.D
Dangerous
B.o.D
Low
Limited
Role of the Board within the
decision process
Relevant
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Roles of Boards of Directors
The Board of Directors doesn’t have direct
managerial tasks, but governing tasks which
may be aggregated into
legal role
strategic role
In a “governing” Board of Directors it is
necessary to develop both roles
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The outside directors
It is difficult (or impossible ?) to organize a
“governing” Board of Directors without outside
directors who can be:
 Affiliated (friends, ex managers, …)
 Unaffiliated or independent
Outside members can support the company and
the owning family
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The roles of outside directors for the
company
In terms of control:
 to
stimulate
responsibility
self-discipline
and
a
sense
of
 to promote the introduction of reporting tools more
sophisticated
performance
and
connected
to
management
 to monitor potential confllicts of interest
 to secure minorities’ interests
 to secure other stakeholders’interests
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The roles of outside directors for the
company
In terms of strategy
 to acquire new experiences and competencies
 to
have stimulating counterparts
formulation of goals and strategies
during
the
 to improve the quality of the decision making process
through deep-reaching questions
 to improve the quality of people evaluation processes
 to improve relations among other stakeholders and
the business
 to improve the reputation of the company
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Outside directors can
complete the skills
missing from the board
(1/2)
According to directors of family-owned and nonfamily-owned businesses:
Are there skills
missing or
insufficiently
represented on this
board?
Is there a formal
process of determining
what skills are required
for the board and,
therefore, for new
directors?
Source: Boris Groysberg and Deborah Bell
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Outside directors can
complete the skills
missing from the board
(2/2)
What are
the skills
missing
from
boards?
Source: Boris Groysberg
and Deborah Bell
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The roles of third parties for the family
Third parties unaffiliated of the owning family are very
useful for family governance because they help:
 to define the right rules in the relations among the
company and the family
 to plan in a professional way the succession process
 to manage some “strategic traps” that may happen
because of the entrepreneur getting older
 to manage with less emotional bias the tensions
which may arise among family shareholders,
managers and non managers
 to train successors
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Zegna case:
corporate governance
 Board Governance:
 Four “independent” Board members out of 8, with
age limit rule
 Audit Committee and Compensation Committee

Group Governance:
 Executive Committee: top management, of which
one third is foreign, meets 4 times per year
 Zegna Convention: all worldwide executives meet 2
times a year (of which one at our Milan
Headquarters)
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Zegna case:
family governance
 Entry of the next generation:
 Admission rules tied to education, competence and
passion: university degree, foreign languages and
work experience in other companies for at least 3
years
 Young Generation Committee: meets twice a year
under the guidance of our Chairman Paolo Zegna and
with the presence of experts in Family Business to
move the fifth generation towards the Group.
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De Agostini case:
family governance
(1/2)
The Assembly of the shareholders has approved the
“Rules for the IV generation”. According to these rules,
members of this generation could have different roles:
 Managers: a candidate must reach some significant
results in the managerial career outside, before entering
in the Group
 Part time employees: each branch of the family can
candidate two members for part time employment
 Suppliers or consultants of the companies of the
Group (with some limitations).
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De Agostini case:
family governance
(2/2)
To prepare all the members of the IV generation to their
ownership responsibilities, a Committee IV Generation
has been established.
The Committee is composed by 8 members of the IV generation (4
olders and 4 youngers) and organizes actvities for all the members of
the IV generation.
An Implementation Committee is in charge of all the
development process of the IV generation.
The Committee is composed by the Chairman of the Group, the Vice
Chairman in charge of the relationships with the owners, the non family
CEO, the head of the Committee IV Generation, three consultants
expert in family business and in head hunting.
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Pay attention !
Before asking an outsider to join it is useful to
get to know each other
independent in
his/her judgments
motivated
a balanced
person
morally
upright
used to working
in businesses of
larger size
with experiences
in family
business
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