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1999 | Book

Introduction Read chapter Read first chapter

Dynamic Directors

Aligning Board Structures for Business Success

Author: Allan Blake

Publisher: Palgrave Macmillan UK

Included in: Professional Book Archive

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About this book

The leadership that a board of directors and its individual directors provides has a profound affect on the future of a company in terms of its performance and success. Whilst much has been written about corporate governance little has been written about the dynamics of board architecture, yet the board is a key decision-making body within a company. In this book, the author shows how board members, consultants and policy-makers need to understand the complexity of board architecture, recognising that directors and their leadership skills are dependent on the type of company and its stage of development. Operating at board level is never easy. This book can help to explain why and assist in altering a company's approach to one that is more successful. Just as you may undertake an analysis of the personality type of the various people that you deal with in a client company, the author argues that you can also undertake an analysis of the company at board level. Dynamic Directors provides an invaluable guide to assisting in the development of boards and in showing how successful board development can lead to successful companies, be they family run, entrepreneur, subsidiary or companies listed on the Stock Exchange. Based on the author's experience of working with a wide range of companies, this new book provides practical help and advice. Matching the dynamic environment that companies operate in with guidance as to how companies can align their board structures and composition, Dynamic Directors can help to ensure that the board is the best decision-making team that a company has to help it achieve its goals.

Table of Contents

Frontmatter
Chapter 1. Introduction
Abstract
Istarted to work with boards of companies in 1989, focusing on the role of the company director and the function of board of directors. The input had a legal emphasis. That was my background and the legal rules relating to company boards and their directors were broadly common to all companies, ranging from the listed company to the small family company. However, I soon realized that the need for development was far wider than the legal context. The sheer variety of companies that I came across at different stages of development was daunting. Any set of management tools or materials that I had encountered did not cater for this variety. What assistance there was related to listed companies and had little relevance to the wider range of companies, such as the family or entrepreneur company. This lack of supporting analysis and tools to help the needs of different companies at the top level of management is echoed by Krister Ahlstrom. He was CEO of the Finnish family-owned $3 billion holding company, A. Ahlstrom Corporation. When confronted by a difficult governance issue in his company,
I turned to the management literature for help. And what a revelation that was! I found miles of shelves with books on management. They all concerned strategy, how to compete in the marketplace, how to organize a company for maximum effectiveness.
Allan Blake
Chapter 2. The Nature of Corporate Variety
Abstract
This chapter explores the nature of corporate variety. It will look at the different types of company and their stages of development. The framework used to carry out this exercise has been used with over 250 companies and 450 directors in order to help them to assess the present state of their board architecture and plan for change. To illustrate the power of the technique, the framework will be illustrated through case studies that look at a snapshot of various types of company at one moment in their life. In the following chapters the framework will be applied to observe how these companies will change over time, plotting their progress and assessing how the function of the board and its personnel may need to alter with the company.
Allan Blake
Chapter 3. Board Architecture and Entrepreneur Companies
Abstract
This chapter analyzes the development of the entrepreneur company and the affect that this has on board architecture. Some entrepreneur companies may evolve into family companies if succession is handled smoothly. These companies will be analyzed in the next chapter. In this chapter our study of the development of entrepreneur companies will include how board architecture needs to change as the entrepreneur confronts the three crises identified by Mueller:
(1)
the crisis of finding the founding owner’s successors,
 
(2)
the crisis of reorganization under the new leadership, and
 
(3)
the crisis of the original owners and principals letting go of their dominant hold on the enterprise. (Mueller: 84)
 
Allan Blake
Chapter 4. Board Architecture and Family Companies
Abstract
Family businesses account for 66 per cent of all businesses across the world. In the US they generate $1.5 trillion of the gross national product and total 1.7 million businesses (Mueller: viii). In Germany 60 per cent of the mainly family-owned Mittelstand companies, like Porsche and Haribo, are among the world’s top five in their sector and account for about 20 per cent of Germany’s DM900 billion in exports. Others cite even larger numbers of family companies depending on the definition of a family business and whether they have opted for the corporate form (Shanker and Astrachan). The family business and family companies are a very significant business structure. The variety of companies that fall within just this one category is enormous, reflecting the different paths family companies have taken in their survival through the generations of family owners. Some are large listed companies, like Sainsbury’s, Fiat, and Ford. In Sweden the major engineering companies are nearly all controlled by ten families. These are companies that have survived the transition through the generations with a large proportion of stock remaining in the family. They have developed so effectively in Sweden because ‘Local rivalry, little protection in the home market, and early internationalization have added to the challenges to innovate and upgrade competitive advantage’. (Solvell, Zander and Porter: 139)
Allan Blake
Chapter 5. Board Architecture and Listed Companies
Abstract
All listed companies will have subsidiaries, but not all subsidiary companies have a listed company as their holding company. The relationship that the listed holding company has with its shareholders will affect the relationship that the holding company can have with its subsidiaries.
Allan Blake
Chapter 6. Board Architecture and Groups of Companies
Abstract
The relationship between companies in a group is a key factor in the success and survival of the group. As we have already observed in the previous chapters the relationship will usually be a dynamic one. The best positioning of the holding and the subsidiary company will vary according to the needs of the group and the rationale for the creation and continuation of separate subsidiary companies. However, the analysis of the reasons for the establishment and continuation of operating through separate companies within a group is not undertaken that frequently. Most of the research into holding and subsidiary company relationships has involved large multinational groups of companies. However, the lessons are the same for any group relationship. Indeed, the even apply to a situation where responsibility is devolved within an organization to operating units rather than to separate companies.
Allan Blake
Chapter 7. Policy and Business Perspectives
Abstract
This chapter identified key policy and business perspectives that could alter the business environment over the next decade. This is accompanied by an assessment of the extent to which the analysis of corporate variety and its impact on board architecture should influence those perspectives. The key perspectives identified in this chapter are:
  • Policy Perspectives
    • Corporate governance — different rules for different companies
    • The impact on the corporate investor — investing in and influencing structural changes in different companies
    • The role of business support agencies — helping the wide range of companies to prosper
  • Business Perspectives: Strategy
    • Intellectual capital — valuing and renewing intellectual capital as a function of the board
    • Innovation leadership — part of the complex leadership attributes of directors
    • Mergers and acquisitions (including intra-Group mergers) — identifying structural differences between companies to either enhance success or abandon the proposed merger.
Allan Blake
Chapter 8. Conclusion
Abstract
We have identified how the function of the board of directors and the qualities of the directors on the board need to change reflect the dynamic relationship between the shareholders and the board. All companies need dynamic boards of directors in order to prosper and endure. This is the heart of good governance. It affects all companies, all the people who work for them and the communities in which they are based. This responsibility makes being a director on a board an onerous position to hold and the planning of the role and composition of the board of directors a key activity.
Allan Blake
Backmatter
Metadata
Title
Dynamic Directors
Author
Allan Blake
Copyright Year
1999
Publisher
Palgrave Macmillan UK
Electronic ISBN
978-1-349-14889-9
Print ISBN
978-1-349-14891-2
DOI
https://doi.org/10.1007/978-1-349-14889-9