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Key Ideas Newsletter . Fall . 2004 |
| Key Ideas for Family Businesses & Their Advisors Brought to You by Jane Hilburt-Davis & Key Resources As we enter this fall season, Key Ideas brings more resources for family businesses and their advisors.
Feature Article Family Meetings: The Dangers of False Consensus Several years ago, a social psychologist. Solomon Asch, performed a famous group pressure experiment in which an individual is asked which of two of four lines were of equal length. Other group members, coached in advance, unanimously picked a clearly unequal line. The tension mounted in the room because the uncoached subject wanted to be both accepted by the group and confirmed that he was right, as he was certain he was. From this experiment, Asch asked
the question: Under what conditions would people agree to see
the same thing and produce false consensus, or in today's world,
experience 'group think'?
Tips
& Tools View Outline and Order Information >
Book
Review
What
Would You Suggest? In our last issue of Key Resources we presented readers with an interesting case study of two brothers facing a family business challenge. We invited you to respond and got some insightful suggestions. View the case study with reader suggestions >
In
the News Here's a new take on corporate governance. Wharton accounting professors, David Larcker, Irem Tuna, and Scott Richardson find that although lots of people are coming up with governance scorecards, and best practices and "selling this stuff, as far as we can tell, there's no evidence that those scorecards map into better corporate performance or better behavior by managers." They do think that corporate governance matters but after "puzzling over reams of company numbers, they are not confident that anyone can measure whether one firm's governance is better than another's at least, not by using typical metrics." They conclude that structural indicators of corporate governance used in academic research and institutional rating services have a very limited ability to explain managerial decisions and firm valuation. Structural indicators include:
No matter how they parsed the data, as the article states, they didn't uncover any strong, consistent relationship. In many cases, in fact, "they even saw the opposite of what one might expect, finding for example, that companies with big boards report smaller abnormal accounting accruals which is inconsistent with prior research that suggests big boards are bad." They suggest that companies, worried about their governance, do nothing rash. "Our message is that there's not much evidence to back up bold claims and simply benchmarking your governance to best practices isn't going to be that useful." They recommend that companies tailor their policies and practices to what works in your setting. As in all things, decide what's best for you, your company, and your family. Do your homework; decide what the board needs to accomplish and who is best for the job, the company and the stakeholders. Additionally, always keep in mind the new rules for publicly and privately held companies, in the Sarbanes-Oxley Act. Here are a two links for more information on SOX: www.aicpa.org/info/sarbanes_oxley_summary.htm
Readers'
Poll This month we're asking our valued readers to participate in a quick poll (it's simple and anonymous). Please click on the links below to weigh in. We will share the results in the next issue of Key Ideas. For members of family businesses, what do you think is the one factor that most contributes to family and business success?
For advisors to family businesses, what do you think is the one factor the keeps good succession plans from being implemented?
Let
Us Make You Shine Twice as good as WD-40, we at Key Resources assist legal and financial
advisors to help their clients run more effective family meetings
and get to making better decisions about the business. Similar to
the handy WD-40 we "loosen rusted parts and free sticky mechanisms".
An attorney wrote, in a recent letter of thanks to us, "more
than I thought possible was accomplished in the ownership meetings
with your facilitation". Ask us if you need help with:
We are a nationally known group that tackles all these issues with results! Please Contact Jane Hilburt-Davis for more information on how we can work with you to help you shine in your work with your family business and family office clients!
Upcoming
Events Key Resources will be participating in the following events: Moderator of Massachusetts Society for Professional Psychologists The Family Office Symposium
That's all for this edition of Key Ideas. As always, feel
free to contact
us with feedback, questions or comments. Jane Hilburt-Davis CONTACT US: Key Resources - We Invite You to Forward this Newsletter to Friends & Colleagues - |
