Best Practices Of Owner Families by Perheyritysten liitto

Best Practices of Owner Families

O M ISTA JAP ERHEEN HYVÄT K ÄY TÄ NN ÖT

FOREWORD Owners make a difference. The mission of the Finnish Family Firms Association is to build sustainable Finnish ownership. In early 2019, as part of the implementation of our mission, the Board of the Finnish Family Firms Association established a working group tasked with outlining best practices for owner families. The “Cornerstones of Good Board Work” guidelines published by Directors’ Institute Finland (DIF) in 2018 was selected as the model for the project. Family companies of different sizes and ages from various sectors and locations were invited to participate in the working group. Already in the very first meeting, the working group realised that the project at hand was quite complex. The following question was set as the guiding principle for the work: How can an owner family best contribute to the success of its jointly owned business? The working group agreed that there are many important aspects of good ownership that go beyond financial success as reflected in financial statements. These include, for example, business renewal, the transparency and legitimacy of decision making, agreements on roles and responsibilities, facing conflicts and dealing with them, sustainable development and crisis resilience, ownership transfers and their management and mismatches in resources required and resources available. In addition, a key to good ownership is the realisation that the owner strategy and business strategy are two different things, yet the two are interdependent. Another key to good ownership is accepting that the family may not always be the best possible owner for the business. The first version of the Best Practices of Owner Families was presented in the 2019 spring meeting of the Finnish Family Firms Association, after which all members had the opportunity to provide their comments. In summer 2019, the proposed best practices were scrutinised for alignment with the governance code for Finnish listed companies. Through this, the practices can now also serve as a tool for long-term “anchor” owners. The final ten practices were approved in the Finnish Family Firms Association’s autumn meeting in November 2019. I would like to thank all members of the working group for our inspiring discussions. This publication would not have been possible without all the perceptive thoughts, ideas and views you shared. I would also like to extend my special thanks to the secretary of our working group, Krista Elo-Pärssinen, whose extensive and substantive knowledge, analytical skills, patience and process discipline made this report possible. Every family company is different and owners play different roles depending on the company. However, it appears possible to outline general principles of ownership that apply to them all. We have sought to define the best practices in owner families with a view to ensuring the long-term success of family-owned businesses. The practices are not presented in order of priority, and the list is not all-inclusive. We hope that they will stimulate discussion in owner families and provide new views on how the family as an owner can add value for the good of all stakeholders of the family business. At its best, ownership is work that creates new, profitable and sustainable growth. Ownership is a commitment.

Philip Aminoff Chair of the working group MEMBERS OF THE WORKING GROUP Ia Adlercreutz, Spikesafe Oy Lena Jungell, Oy Karl Fazer Ab Erkki Ikäheimo, Lappset Group Ltd. Miia Porkkala, Aho Group Oy Henrik Paasikivi, Oras Invest Ltd. Nina Orvola, Kotivara Oy Raimo Voipio, Vaisala Corporation (2020-) Secretary Krista Elo-Pärssinen, PL

PERHE Y R I T YST E N LI I T TO

B EST P R ACTIC ES O F OWNER FA M I LI E S

INTRODUCTION

Owners make a difference. Good owner families act ethically and have a long-term vision. They recognise their responsibilities towards their community and the firm, along with its stakeholders, and create well-being in society. Best practices of owner families support the long-term success and continuity of family businesses. Discussion on the best practices of owner families promotes commitment to the shared vision and objectives. It also increases the cohesion of the owner family and improves their possibilities to overcome crises. Having best practices, an owner strategy and a unified voice of the owner family makes it easier to find and appoint suitable board members, provides a framework for the board’s decision-making and improves the efficiency of the board’s work. The best practices of the owner family also help family businesses cope with risks related to the business and the family. The best practices of the owner family are an essential part of the family’s risk management. It is recommended that owner families discuss ownership and regularly and proactively update their owner strategy and family constitution, already before there are any major changes in the environment, situation or ownership of the family firm. However,

owner families always act based on the available information, and not everything can be foreseen. The process is at least as important as the end result. Successful completion of the process requires a lot of open discussion in the owner family. During the process, the family develops its internal communication and problem-solving and decision-making capabilities. An external moderator should participate in the discussions and the family firm’s board of directors and management should also be adequately involved. Time, understanding of the objectives of the process, respect and recognition between the family members, willingness to discuss and the commitment of the family and its leading figure are prerequisites for a successful process. It is also good to be prepared for surprises and changes in the course of the process, which may require that practices are reviewed. All families are different and owner families, therefore, have different practices. No practices are better than others, and there are no right answers. Sometimes you might come up with ideas based on the practices of other owner families, but the key is that the family has together agreed on the practices so that they meet the family’s needs. 5

PERHE Y R I T YST E N LI I T TO

â&#x20AC;?We have organised facilitated ownership strategy workshops for all owners. Allocating time and resources to clarify an ownership strategy was worth the effort. Our new ownership strategy has clarified roles and facilitated cooperation between owners, the board and management. â&#x20AC;? Henrik Paasikivi Oras Invest Ltd

B EST P R ACTIC ES O F OWNER FA M I LI E S

1. The owner family dedicates time and resources to the management of ownership.

An active and forward-looking owner family creates added value to the company. Similar to the family business, the family’s ownership must also be managed and controlled to ensure that the added value that the family brings to the company is as high as possible. The larger the owner family, the more time and resources it takes to manage ownership. It is often difficult to find time for managing ownership because operative management and everyday issues feel more pressing. Matters related to the management of ownership are of primary importance when considering the continuity of ownership, and time should be allocated for that purpose. The creation of the owner family’s common view and best practices requires reflection and many discussions. The owner family can organise workshops for owners having various roles, and board members and managers who are not part of the family may also be invited to participate. The discussions should have a moderator who is not part of the family. A moderator brings objectivity, structure and target-orientation to the discussions. It is easier for an external moderator to initiate discussions on sensitive issues and to act as the catalyst for feelings. Discussions that are generally related to ownership should be conducted in a separate forum. Board meetings are not the right

place to discuss issues related to ownership. For example, a family or owner council could be the forum for such discussions. The boards of holding companies are often used for this purpose. All members of the owner family should be given the opportunity to participate in the discussion, for example, in a family meeting or during the family’s strategy days. A separate discussion forum should be established even for family firms owned by just one core family. The existence of the forum and the discussion itself are the most important things, and the form of the forum is not of major importance. In crisis situations, it must be possible to convene the owner forum at a short notice so that the owner family is able to quickly respond to any changes in circumstances. The owner’s voice should be audible in a crisis, in accordance with the division of responsibilities agreed in the company’s governance model (owner-board-management). Ownership is work and its coordination should be the responsibility of a family member who is motivated and has the skills required for the job. Financial resources are also required for the management of joint ownership. In the family forum, it should be discussed and agreed which expenses the company is liable for and which are personal expenses. 7

PERHE Y R I T YST E N LI I T TO

â&#x20AC;?We have only discussed the ownership of our family firm as a collective. When the individual expectations of owners were discussed for the first time, we found out that not everyone wanted to be owners. Some felt that ownership was stressful, and not everyone wanted to pass the burden on to the next generation. The outcome was that we implemented internal changes to ownership.â&#x20AC;? A family firm owned by the third generation

B EST P R ACTIC ES O F OWNER FA M I LI E S

2. The owner family defines together the values guiding ownership, the purpose and objectives of ownership and the indicators used to asses the outcome of these. These are some of the tools used to develop an owner strategy that provides a framework for the board’s decision-making.

The higher the number of owners, the more important the values guiding ownership, the purpose and objectives of ownership and the indicators used to asses the outcome of these. As the number of owners increases, there will be an increasing number of opinions concerning the operations of the family business and its development. Owners should initiate discussion on the vision and start by agreeing on whether they want to continue together as an owner family, on which terms and what do they want to own and achieve as owners. Shared vision and objectives promote the renewal and success of the family business in the long term. Values guide all actions of the owner family. They create the basis for the culture of joint ownership, define the decisions made concerning the ownership strategy and guide the creation of management and remuneration systems. Values are tested whenever there is a crisis. When recruiting executives, it is good to ensure that the candidate’s values are aligned with the ownership values. The values of the founder often continue to live on in the owner family’s culture, but in the next phases, the culture is also shaped by the values of other family members. At the same time, different generations express the same values in different ways and thus bring new content to the old values. The family members do not necessarily share all the same values, but the owner family should agree together on their shared values concerning ownership. The purpose of ownership answers the question “Why should the family have joint ownership?” It is the reason for the existence of joint ownership. It tells you how the owner family wants to influence and create prosperity. It motivates and inspires the owner family to renew, take risks, be entrepreneurial and commit to the operations of the family firm. At best, the purpose

combines emotion and reason. The purpose of the owner family may also be found in the thoughts of the company’s founder—why the company was established and what did the founder want to achieve with the business. The values and purpose can also be processed in workshops organised by the owner family. Sometimes the purpose and values are crystallised for the owner family when it goes through difficult times. Creating forceful values and purpose helps communicate them to all owners and other stakeholders. The owner family’s objectives may be related to business operations or the family. Business-related objectives of the family may concern, for example, net sales, market share, profitability, risk-taking, equity ratio, dividend yield or the growth of the company’s value. It is important to create indicators for measuring the outcomes of objectives and they must be communicated to the board of directors. In exceptional situations, the owner family must adjust the financial targets it sets for the board. The objectives related to the family may involve, for example, the owners’ involvement in the company’s operations and owner family cohesion, increasing skills and knowledge, reputation, education of the next generation and social capital. The objectives related to the owner family are more difficult to measure. When the owner family’s objectives are aligned with the company’s business strategy, they strengthen the family business. It is important that the family is aware of the crisis tolerance of the jointly owned company and that they proactively review the owners’ willingness to support the company in exceptional circumstances. The ownership strategy based on these and other themes is communicated to the board of directors. 9

PERHE Y R I T YST E N LI I T TO

”It wasn’t until I stepped down as a Managing Director that I learnt to understand the role of ownership and the responsibility that comes with it. ”

Chair of the Board of Directors Miia Porkkala Aho Group Oy

”Early in my career, I was simultaneously a member of the parent company’s board of directors and the Managing Director of a subsidiary in a challenging situation. I don’t recommend similar wearing of many hats to anyone.” Chair of the Board of Directors Philip Aminoff Helvar Merca Oy Ab

B EST P R ACTIC ES O F OWNER FA M I LI E S

3. The owner family defines the various ownership roles along with their responsibilities and potential remuneration. These roles include operating owner, governing owner, owner of ownership practices and passive owner. The owner family is able to handle the challenges related to the role changes of individual family members.

The family members may have various roles as the owners of the family firm. The different roles of owners affect their objectives, commitment to the company, the way owners act and influence in the company and the added value owners bring to their companies. The higher the number of different roles in the owner family, the more dispersed the objectives of the owners and the more important the owner family’s practices and role definitions. The owner of the ownership practices leads the process for creating the family’s practices. This person will also ensure that the practices are implemented. Operating owners work in the company and are involved in its daily operations. Governing owners influence through the company’s governance, for example, as a board member or as a member of the family council. They are not involved with the company on a daily basis. Passive owners may have not yet made a conscious decision on ownership or they are not interested in ownership. They have no role in the company, but can nevertheless be proud and committed owners. Regarding the continuity of a family firm, it is important that at least one member of the owner family is a member of the company’s management. Usually one or more family members are also operating owners. The risks for the owner family increase if one family member has several roles at the same time. It is easier to overcome crises if deputy arrangements have been agreed for the key roles of the owner family.

When roles have been defined, the owners must define the expectations and requirements for each role and act in accordance with these expectations. When one person has multiple simultaneous roles, there are often conflicts between the roles, in which case it is important to know the role one plays in each occasion. The personnel, customers and other stakeholders of the family firm always regard owner family members working in the family firm as owners as well. A family member may have several different owner roles during their lifetime. For example, they can grow from a passive owner to an operating owner or step back from the role of a governing owner. The owner family must plan the path for role changes and prepare for them well in advance. For example, how will a new board member or managing director utilise the knowledge and networks of their predecessor or how will the next generation be coached to take a more active role as the owner. Role changes should also be acknowledged symbolically, for example, in events organised by the owners of the family firm. Some owner families establish role rotation, where a person can, for example, act as the owner of ownership practices for three years, after which another member of the owner family is appointed to this role. The principles regarding the roles of owners and any role changes should be agreed together in advance. When one door closes, another door opens—this also applies to the role changes in family firms. 1 1

PERHE Y R I T YST E N LI I T TO

”The young people in our family have gotten to know the company as trainees at the grassroot level. However, when it comes to the board of the family firm or other demanding duties related to ownership, only appropriate education and the demonstration of skills outside the company are proof of the professional skills and competence of the next generation’s representatives. The young people in our family have gotten to know the company as trainees at the grassroot level. However, when it comes to the board of the family firm or other demanding duties related to ownership, only appropriate education and the demonstration of skills outside the company are proof of the professional skills and competence of the next generation’s representatives. ” Chair of the Board of Directors Raimo Voipio and member of the Board Ville Voipio, Vaisala Plc 12

B EST P R ACTIC ES O F OWNER FA M I LI E S

4. The owner family is aware of the competence, experience and motivation of its members and supports their development in preparation for assuming a suitable role.

When considering the renewal of the family firm and the development of the owner family, it is beneficial if some of the owners are individuals who, through their skills and enthusiasm, can bring added value to the operations of the company or owner family. Identifying suitable roles and agreeing on them is challenging. It is often the case that not all individual owners can take the role they would like to have. At the same time, it may be that an individual owner has to operate simultaneously in multiple roles. Owner families should regularly discuss the expectations and dreams of the owners. Sometimes an owner is extremely interested in working in the company, but a role or position that would feel natural to them cannot be found. An external specialist brings objectivity to the discussions and can, for example, conduct personality or aptitude tests for the members of the owner family. Formal education, work experience and various types of coaching increase the competence of the owners and also enable them to build their own networks. Various events and trainings organised by the Finnish Family Firms Association and other peer networks provide excellent opportunities to learn from other family firms and exchange experiences related to ownership. The next generation must be given the opportunity to show what they are made of and prove their abilities. They could, for

example, be given the responsibility for some projects that boost their self-confidence and help them develop. Having autonomy makes the successors more proactive and innovative. One can earn the recognition and respect of the previous generation by demonstrating oneâ&#x20AC;&#x2122;s skills. The generation that is stepping down should plan the responsibilities of the next generation so that they experience failures and successes in an appropriate measure. Duties that are sufficiently demanding help them grow and build confidence. It is beneficial for the self-esteem and competence of the successors if they work in some other organisation than in their family firm early in their career. This provides an opportunity to gain valuable experience and new perspectives, perhaps even from a different sector, and they can build their professional identity under the watchful eyes of people who are not their relatives. Many owners of family firms continue to build their careers elsewhere and continue as an active owner of the family firm by developing the company in the role of a governing owner. Work provides new perspectives and, at best, it supports the renewal of the family company. Larger owner families collect the CVs of the family members to a CV bank.

â&#x20AC;&#x192;â&#x20AC;&#x192;13

PERHE Y R I T YST E N LI I T TO

”Even decisions that are not made have consequences. ” Director Erkki Ikäheimo Lappset Group Ltd

B EST P R ACTIC ES O F OWNER FA M I LI E S

5. The owner family’s decision-making is transparent. There are clear decision-making processes, which allow for the expression of various opinions and enable decision-making.

A transparent decision-making process increases the family firm’s possibilities for success and renewal, the trust between the process participants and their commitment to the agreements they make. When the decision-making process is clear and fair, the members of the owner family feel that they have been treated fairly. It also makes it easier to accept decisions, even when one first had a different opinion on the matter. A clear and fair decision-making process has several phases1: engaging and framing exploring and eliminating deciding and explaining implementing and executing evaluating and learning The fairness of the decision-making process increases when the members of the owner family are engaged in it in various ways early in the process. The grounds and criteria for decision-making are also defined early on.

the decision and to implement it. A post-decision assessment is a good learning experience: What did we learn from this and what can we do even better next time? In a fair decision-making process, all participants can have their voice heard and they are listened to. In addition to good communication, a prerequisite for a fair process is that the participants openly share their objectives and that decisions are made in accordance with the agreed process. Words must be in line with actions. A fair decision-making process does not mean that everyone gets to decide, but that everyone is heard in the decision-making process. Family firms are not democracies, and some people have more power to make decisions than others. Decisions, processes, objectives and principles may change as the operating environment evolves or when decision-makers obtain new information. In this case, the reasons for the change must be openly communicated to the participants.

The next phase involves weighing various options and considering their consequences. Once a decision has been made, it would be good to provide the participants with justifications for the decision and what it means to each party. This makes it easier to commit to

1 Van der Heyden, L., Blondel, C. & Carlock, R. S. (2005). Fair process: Striving for justice in family business. Family Business Review. 18(1)

PERHE Y R I T YST E N LI I T TO

”I changed the way I talked about our family business at home. I consciously started to talk about me participating in the work of Kotivara’s board of directors instead of talking about “Oulu days”. I specifically talked about our family business and mentioned continuity in passing. One day, when discussing something else, my child said: “That’s our family business.” Sensitisation is happening! ” Member of the Board Nina Orvola Kotivara Oy

B EST P R ACTIC ES O F OWNER FA M I LI E S

6. The owner family lets young family members gain experience of ownership early on so that they are able to understand the role of the firm in the family’s life.

Instilling the family’s entrepreneurial legacy in the next generation requires the adoption of entrepreneurial attitude and spirit and the sharing of the entrepreneurial actions and stories of the previous generations in the family. It is easier to pass on the entrepreneurial legacy if the next generation experiences the company’s operations and its everyday life early on. The family’s unity and positive experiences of family entrepreneurship strengthen the continuity of entrepreneurship. With this, familiarising oneself with the family business and the subsequent generation change will become easier and more commonplace. In addition to entrepreneurship, it is important to understand responsible ownership: What does it mean to the owner family and how is it implemented? This includes, among other things, discussions on wealth and money. In addition to legal ownership, that is, owning shares, it is important that the family members experience psychological ownership, which means that they have an emotional tie to the family business. This increases their commitment to the family firm and their willingness to develop it.

Upbringing and education play a major role in the creation of psychological ownership. Psychological ownership in the company increases when the family members get to know the family firm and its stakeholders, and when the stakeholders get to know them. For example, visits to the company, summer jobs and projects, excursions to the various locations of the family firm and trade fairs for the industry are likely to spark the next generation’s interest in the family company. These are good ways to introduce the company and, to the personnel and other stakeholders, they are a sign of the continuity of responsible ownership. This increases the next generation’s understanding of the company’s dynamics, values and culture. Spouses play a key role in the upbringing of younger family members. For this reason, the family should discuss the values related to ownership. Family companies and owner families have a lot of tacit knowledge, which should be transferred to the next generation. Tacit knowledge based on experience can be transferred in family companies through various stories. Even painful issues related to the history of the family firm should be shared. They are usually the ones that provide key learnings. Owner-entrepreneurs who are stepping asi 17

PERHE Y R I T YST E N LI I T TO

”We will never be ready as owners—constant exposure to new stimuli is necessary and whenever you feel that “I know how to do this”, you should change your course towards new experiences and networks. The power of networks will be increasingly important in both operational business and ownership.” Owner/Entrepreneur, Chair of the Board of Directors Peter Fredman Fredman Group

B EST P R ACTIC ES O F OWNER FA M I LI E S

7. The owner family ensures the constant renewal of the family and the family firm.

For family firms, continuity requires renewal, which takes place when new opportunities are sought and utilised. Completely new opportunities enable a major overhaul of the strategy, whereas efficient utilisation of opportunities renews the company gradually in small steps. These are two different processes—the seeking of something new (entrepreneurship), and the utilisation of something that already exists (management)—which are both needed in an appropriate measure in a successful family business. The constant renewal of a family company requires from the owner family an entrepreneurial mode of operation and continuous maintenance of expertise. Entrepreneurial owner families prepare for changes in the business environment, for insecurity and the new economy. Owner families must stay up to date. In addition to the continuous renewal of business operations, the continuous renewal of a family business may also mean that the company portfolio is overhauled. Many owner families acquire and sell companies and businesses in the course of time. They

find that corporate transactions provide an opportunity to create more value for the developed business and the family. Funds obtained through divestments can be invested in new companies that will then be developed. In time, the owner family might diversify its holdings to various industries, in which case expertise in some specific industry is no longer sufficient. This requires so-called meta-industry expertise, which includes, for example, strategic planning, portfolio management, investment and risk analyses, corporate acquisitions, financing, ensuring the motivation of management and board work. Building such expertise may be difficult if the owner family sells the family business and transforms from entrepreneurs into investors overnight. This requires that the family develops a new identity. They can no longer associate themselves with one company, but they have to find new ways of talking about themselves and doing business. As owners, we want to develop business operations that last from one generation to the next. This is why our requirement in the owner strategy for Fredman is that, by 2030, all our products will be recyclable and manufactured from renewable materials.

PERHE Y R I T YST E N LI I T TO

â&#x20AC;?We had already been able to process the issue among the owners for some time. It was clear to us that we wanted Kovanen to succeed as well as possible in the new market situation. This meant that we believed that by selling the business to a Swedish group of companies operating in the sector, Kovanen would have broader shoulders and it could therefore better develop its operations in the future in the increasingly competitive market. Personal interests did not influence our decision to sell, but we considered what is best for the company. We believe that the owner we found for the Kovanen brand is the best possible one, which the employees like working with and that can provide our customers with improved services. â&#x20AC;? CEO, Partner Eeva Kovanen Kovanen Capital O

B EST P R ACTIC ES O F OWNER FA M I LI E S

8. The owner family is prepared to challenge the existing owner strategy and consider whether the owner family is the best possible owner for the firm.

Changes in the business environment and the owner family have an effect on the family business and challenge the owner strategy every day. New situations require that the family considers which business activities they want to be involved in and what is the added value that they bring to the company as owners. Striving for continuity is part of family entrepreneurship. Continuity does not necessarily mean that the owner family continues to own the same company or business. In a family business, continuity means the continuity of ownership and entrepreneurship, and there may be changes to what is owned, that is, the company. Companies are successful when they have appropriate and competent owners.

help assess alternative strategies and choose solutions that take into account the interests of both the owner family and the company’s business. It is often difficult to discuss the sale of a family business, but that discussion is worth having: Are we ready to give up the business and on what terms? Ownership should not be built to be a prison for an individual owner. Individual owners should have the possibility to sell their shares if need be.

The owner family should regularly asses whether they are the best possible owner for the company. If the family no longer has anything to give to the company as owners, it is better for the company and its stakeholders if the ownership base is changed. This should be done before it is too late—it is difficult to sell a shrivelled and poorly managed company. Discussions between the owner family and the board of directors

PERHE Y R I T YST E N LI I T TO

”We started to collect and document the joint practices at the initiative of the third generation, as the family started to grow and we wanted to ensure smooth communication within the family and between the family, board of directors and management. This “family manual” has been a good framework for many discussions. The contents have been updated approximately every two years, as necessary. The process itself has always provided a valuable opportunity to discuss and challenge and therefore develop the joint practices. ” A family firm owned by the fourth generation

B EST P R ACTIC ES O F OWNER FA M I LI E S

9. The owner family documents its practices and communicates them to mutually agreed parties.

Documenting the practices of the owner family makes them visible and strengthens the mutual trust of the owners. If the agreed practices are adhered to, they will also prevent conflicts. Owner families document the discussions and the related conclusions related to their practices in various ways. Some families include them in a separate document, such as a family constitution or an owner strategy, while others may include them in the shareholder agreement. The form and content of the documentation of practices depend, for example, on the needs and size of the family, the number of generations, ownership ratios and the company’s business environment. An owner strategy is often created in phases. In the first phase, it is good to document all values and practices related to the joint ownership on which everyone agrees. This will be a good starting point for discussing other key questions, such as the following: What is important to us in terms of ownership, how will we operate together as an owner family and what is the message that our family/owner culture communicates externally? Answers to these questions should be included in the documented owner strategy, which is clarified and strengthened through this.

Signing the document including the owner family’s practices is a good way to finalise the creation of the practices. The document can be signed by all family members or only those who participated in the process. Signing a shareholder agreement is legally binding. Signing other documents is morally binding. After documenting the practices, they should be communicated to the entire owner family, unless everyone participated in the creation process. A joint event can be organised in order to communicate them to the board of directors and the company’s management. Knowing the practices helps all parties act in their role in a way that is best for the family company. Regular communication and interaction between the owner family and the board of directors promotes the alignment of the owner strategy and business strategy. In addition, sharing the family constitution with the board of directors and the management team increases understanding in various situations and facilitates cooperation and flexible communication.

PERHE Y R I T YST E N LI I T TO

â&#x20AC;? In our first owner strategy, we stated that one of our key tasks is to select the best competent boards for our companies. For the first six years, we ourselves were the best and most competent. Once we got into the swing of it, none of us would want to go back to how things were! â&#x20AC;? Chair of the Board of Directors Miia Porkkala Aho Group Oy

B EST P R ACTIC ES O F OWNER FA M I LI E S

10. The owner family implements the mutually agreed practices.â&#x20AC;Ż

What is important is not the mere existence of best practices but that they work and are implemented in everyday operations. For example, it is not enough that roles and the related rights and obligations are defined clearly, as actions must also be in line with what has been agreed.

The practices of the owner family must be renewed and updated from time to time, to ensure that any changes in the owner family or the business environment are taken into account. Such work is often carried out continuously.

Success depends on people. The members of the owner family should have mutual trust, motivation and the ability to cooperate in the best interests of the family business. To ensure implementation, the right people should be responsible for the development of practices and there should be a schedule for the implementation. Regular follow-up promotes the implementation of the agreed practices. The owner family should also agree on the actions that are taken if the jointly agreed practices are not implemented or complied with. If the trust between the members of the owner family crumbles, it could be very costly to the company.

â&#x20AC;&#x192;â&#x20AC;&#x192;2 5

PERHE Y R I T YST E N LI I T TO

Notes

B EST P R ACTIC ES O F OWNER FA M I LI E S

2 7

Owners make a difference. Perheyritysten liitto ry Salomonkatu 17 B 00100 Helsinki 050 566 1592 jasenpalvelu@perheyritys.fi perheyritys.fi @perheyritys #perheyritys