Case Detail

Case Summary

Scott Family Enterprises: Building the Path to Effective Governance

Case Number: 5-118-003, Year Published: 2018

HBS Number: KE1077

Request PreviewBuy

Authors: John Ward; Carol Adler Zsolnay; Sachin Waikar

Key Concepts

Board of Directors, Conflict Management, Corporate Governance, Family Businesses, Leadership, Management Development, Performance Management, Succession Planning

Abstract

As founders of First Interstate BancSystem, which held $8.6 billion in assets and had recently become a public company, and Padlock Ranch, which had over 11,000 head of cattle, the Scott family had to think carefully about business and family governance. Now entering its fifth generation, the family had over 80 shareholders across the US. In early 2016, the nine-member Scott Family Council (FC) and other family and business leaders considered the effectiveness of the Family Governance Leadership Development Initiative launched two years earlier. The initiative's aim was to ensure a pipeline of capable family leaders for the business boards, two foundation boards, and FC.

Seven family members had self-nominated for governance roles in mid-2015. As part of the development initiative, each was undergoing a leadership development process that included rigorous assessment and creation of a comprehensive development plan. As the nominees made their way through the process and other family members considered nominating themselves for future development, questions remained around several interrelated areas, including how to foster family engagement with governance roles while guarding against damaging competition among members; how to manage possible conflicts of interest around dual employee and governance roles; and how to extend the development process to governance for the foundations and FC. The FC considered how best to answer these and other questions, and whether the answers indicated the need to modify the fledgling initiative.

This case illustrates the challenges multigenerational family-owned enterprises face in developing governance leaders within the family. It serves as a good example of governance for a large group of cousins within a multienterprise portfolio. Students can learn and apply insights from this valuable illustration of family values, vision, and mission statement.

Learning Objectives

After reading and analyzing the case, students will be able to: identify common complications related to business and family governance leadership in family enterprise; develop recommendations for creating or refining governance leadership development programs, practices, and policies; and apply insights related to governance leadership development to their own family enterprises or those they work with or advise.

Number of Pages: 25

Extended Case Information

Teaching Areas: Family Business

Teaching Note Available: Yes

Geographic: United States

Industry: Banking, Ranching

Organization Name: Scott Family Enterprises