Board member Marcio Roldão talks about Governance and its role within Family Businesses

By: Clara Briggs

Governance has been one of the most important topics within organizations, since it makes it possible to improve not only the management of the business (short-term view) but also its strategic direction (medium- and long-term view). Basically, when we talk about Governance, we are talking about all the elements and structures that sit from the CEO upward and that connect the CEO and the executive team to the company's shareholders.

Marcio Roldao, an independent board director and specialist in strategy and governance, explains that when we deal with the family business (where one or more families hold control of management), we are talking about the practice of Governance across three different subsystems: Family, Ownership and Business.

This Governance model can be seen through three circles – which may be partially or fully interconnected (as shown in the opening image). Through proper Governance, it is expected that in each of them we can define clear rules, roles, responsibilities, levels of transparency and the creation of structures, so that they become as effective as possible, since the main goal of the business-owning family is to ensure lasting and sustainable value creation.

To make up this Governance structure, Roldão explains that family businesses are advised to structure their boards with both directors who have a close relationship with the family and independent directors. The latter have the mission of bringing in good market practices (an outside view), helping to raise the maturity of governance and always pointing to what is best for the company's value creation, Roldão adds.

Among the major challenges of Governance in the family business, we can highlight the conflicts that may arise as the company grows. In this respect, working on succession makes the family business better prepared to face the future and secure its existence over time. This is done through the proper use of management techniques and methodologies applied day to day and through the structuring of sound strategic planning. The board will monitor all of this work and, beyond that, will always be the great guardian of the company's values and culture, Roldão concludes.