A governance case study for the next generation

A governance case study for the next generation | Daily Tribune

A successful family business celebrated its seventy-fifth year anniversary earlier this year. Kudos to this family-led pioneer in poultry and livestock feeds. More than its presence in the agri and food-related businesses, the social and economic contributions have had a profound nationwide impact on the country since 1950 — thriving today with enthusiasm and exciting plans moving forward, with its next generation leadership in full force.

Few Philippine companies can claim such a storied legacy: from its humble post-war beginnings, the company evolved into a publicly-listed company, becoming a household name and a trusted partner of countless Filipino farmers. Yet, woven into its rich history is a cautionary episode that not many in today’s leadership can deal with head on — a bankruptcy case that shook the company two decades ago but was finally resolved in recent years. Thankfully, the resilience and ability to deal with hard times enabled the company to emerge.

“If you can meet with Triumph and Disaster And treat those two impostors just the same;”

Kipling’s inspirational poem “If,” composed of lines stressing resilience were evident: success lies in staying steady through both victory and setback, refusing to be defined by either. This calm endurance after hard times is what allows one to emerge truly successful.

And so the case is over. The next seventy-five years is a case study in the making. It shall be extremely successful (and sustained!), continuing to be filled with vigor, enthusiasm, resilience and capabilities as in the past but now fortified with good governance structure and leadership that has learned from a storied past filled mostly with greatness but with a speck of admitted failure.

Let’s get to the case. That near-collapse was not the result of a flawed product or a waning market. Risks happen and should have been dealt with accordingly.

It stemmed from something less visible but ultimately more dangerous: the absence of strong risk management, formal governance policies, and a robust board structure. Without a well-defined framework for oversight, even the best-run family enterprise can be blindsided by economic shocks or strategic missteps. For the company, the financial cost of that gap was exacerbated with the time and energy diverted from innovation and growth.

To propel the company confidently into its next seventy-five years, the Board and CEO must do more than maintain operational excellence. They must now synergize and build a professional, world-class governance ecosystem with the Board focusing on strategy and oversight and the executive team on excellent operations standards. Roles have to be clear and distinct.

A high-caliber executive C-suite Team is indispensable. As in any industry, modern agribusiness demands specialists in finance, supply chain, sustainability, digital transformation and risk management. A strong C-suite also provides continuity and resilience. After all, guess who took all the blame when the bankruptcy happened in this case — albeit inevitable with a poor structure in the first place?

Equally vital is a Board of Directors that reflects both the company’s heritage and strategizes its future ambitions. This means moving beyond the familiar circle of relatives and long-time associates to include Independent Directors with proven credentials in corporate governance, audit and risk skills — all formally developed in committees and board-approved charters. Independent voices bring positive signals to stockholders, investors, creditors, regulators and employees and are ALL crucial to make the vision a reality.

On a related note…

The Institute of Corporate Directors (ICD) can be a crucial ally in this effort. By guiding board composition and providing ongoing director education, the ICD helps listed companies align with global best practices. Its frameworks for board evaluation, risk oversight, and strategic planning corporations avoid governance lapses that may prove costly. Corporate membership is on a roll with over ten corporate members inducted or in the pipeline despite its very recent offering.

Such initiatives are not merely defensive. Strong governance is a sustainable strategy. When shall you join? Just let them know: membersrelations@icd.ph.