Mirian Izquierdo -- Why family businesses need to be transformed through boards of directors and independent directors

Much of the research comparing the financial performance of family firms with that of non-family firms emphasises that family firms outperform other firms. However, several studies since the research: Board Composition, Balancing Family Influence in S&P 500 firms (Anderson, Reeb 2004) conclude that by eliminating from the sample of 500 companies, those with independent boards of directors and board members, the family companies analysed had lower financial results than non-family companies. Since then, several studies have similarly concluded that the family business requires not only the commitment of the owner of the family business, but also the supervision of a board of directors, with independent directors, in order to produce superior financial results in the long term.

On the other hand, in family businesses, two different realities coexist - family and company - made up of others, which must be managed separately in order to maximise their value and ensure the sustainability of the company in the medium term, both by minimising and preventing risks and maximising the potential of the resources and complementing the knowledge that the company needs.

This is not only to avoid conflicts of interest, risks derived from emotional conflicts or to contribute key resources and knowledge for the development of the company, but also to enhance the competitiveness of the family business, in the new framework of stakeholder capitalism, which requires companies to manage their relationship with all stakeholders, beyond the shareholders who are members of the family.

In these times of transformation, this need is more important than ever and many of these family businesses will need a board of directors with independent directors to carry out transformations that allow them to remain competitive, attract external investors, affirm their commitment to diversity, good governance and the environment, and other requirements demanded by an increasingly demanding consumer and by different market prescribers, from the legislator with compliance requirements, to third sector organisations, sustainability policies and indices and rankings that classify companies according to strict criteria related to their social commitment and their capacity to generate value for society in general. Consumer perception of a company's social policies can maximise its value or sink it with astonishing speed. Every day we see more and more evidence of this in the markets. Not only in traditional capitalist economies, but, as we witnessed at the recent Davos Forum, in the new multi-lateralised economy driven by China, where consumers share increasingly common globalist demands, regardless of the local market.

Within this framework, the Woman Forward Foundation has developed a course for potential female and male directors, focusing on the relationship between companies and the different stake-holders, designed to strengthen corporate governance, create boards of directors that generate value for all stake-holders and raise awareness of this need among family businesses.

The course, which is offered online, with a limited number of places available in person, preferably aimed at women to alleviate their lack of presence on boards, seeks to train in the most practical way possible potential directors, senior managers interested in corporate governance and in the reporting of non-financial information, and family companies wishing to establish an advisory or management board or a new sustainability committee.

To register for the course click here.