Marcelino Pandin has a rare job - he "fixes" troubled companies for a family-owned conglomerate in Indonesia. In this article, accompanied by a short video, he talks about the unique role that setting a proper governance structure plays in increasing performance of his businesses, and improving relationships between family members.
In working with family businesses, my primary focus is on how the company makes money and creates a peaceful environment for family members to grow and prosper together. Corporate governance is important, but I never look at corporate governance issues first. Governance comes as the last part of my attention, and I treat it as a logical next step in determining how to run a profitable business.
For example, my current role in my family business is to control all business contracts and to fix troubled business units that are either going bankrupt or experiencing negative bottom lines. My assignments have included fixing such business units as a hotel, a hospital, and mining companies. And recently I was asked to transform a troubled pharmaceutical company.
When entering the boardroom in those companies, the very first questions that I asked on Day One were: “How does this company make money?” And, “Why can’t it make more money?” I didn’t ask: “How do you structure your board?” Or, “Do you apply good corporate governance practices?”
In the case of the pharmaceutical company, it finally was revealed that, though the potential market is still plentiful, this troubled company had problems with taxes, internal fraud by family members, unlawful transfer pricing, a company within a company (or business within business), no plan to nurture future managers or directors, very inconsistent implementation of remuneration systems, and obsolete licenses for certain medicines and for supplements—as well as many other business issues.
Where did I start to fix and transform this troubled company?
I started by defining the business model. For that, I needed help and input from the all the board members. The board was dysfunctional at that time, since directors were assigned not based on their competencies but based on their relationships. In my work, fixing a family business always starts from the top. So, I fixed the board membership first—not an easy job! Then, I went on to fix management.
In my efforts, I relate the urgency of transforming the board and adopting good corporate governance to the goals of making money and minimizing risks—not only external risks, such as market or regulatory risks, but also family risks. For instance, there are potential business disruptions caused by never-ending and severe conflicts between family members on both business and personal issues.
My experience has proven that corporate governance is clearly relevant to family businesses. The key is to show that it can help the business make more money by facilitating growth and minimizing conflicts between family members. And, for a family business, that’s an important bottom line.
For more information:
Corporate Governance and Family Control, Discussion paper by Randall Morck, University of Alberta, and Bernard Yeung, New York University, October 2003.
In working with family businesses, my primary focus is on how the company makes money and creates a peaceful environment for family members to grow and prosper together. Corporate governance is important, but I never look at corporate governance issues first. Governance comes as the last part of my attention, and I treat it as a logical next step in determining how to run a profitable business.
When entering the boardroom in those companies, the very first questions that I asked on Day One were: “How does this company make money?” And, “Why can’t it make more money?” I didn’t ask: “How do you structure your board?” Or, “Do you apply good corporate governance practices?”
In the case of the pharmaceutical company, it finally was revealed that, though the potential market is still plentiful, this troubled company had problems with taxes, internal fraud by family members, unlawful transfer pricing, a company within a company (or business within business), no plan to nurture future managers or directors, very inconsistent implementation of remuneration systems, and obsolete licenses for certain medicines and for supplements—as well as many other business issues.
Where did I start to fix and transform this troubled company?
I started by defining the business model. For that, I needed help and input from the all the board members. The board was dysfunctional at that time, since directors were assigned not based on their competencies but based on their relationships. In my work, fixing a family business always starts from the top. So, I fixed the board membership first—not an easy job! Then, I went on to fix management.
In my efforts, I relate the urgency of transforming the board and adopting good corporate governance to the goals of making money and minimizing risks—not only external risks, such as market or regulatory risks, but also family risks. For instance, there are potential business disruptions caused by never-ending and severe conflicts between family members on both business and personal issues.
My experience has proven that corporate governance is clearly relevant to family businesses. The key is to show that it can help the business make more money by facilitating growth and minimizing conflicts between family members. And, for a family business, that’s an important bottom line.
For more information:
Corporate Governance and Family Control, Discussion paper by Randall Morck, University of Alberta, and Bernard Yeung, New York University, October 2003.
No comments:
Post a Comment