When family and business collide

The Kailises

For family businesses looking to a future of sustainable growth and success, questions are often asked about when it is appropriate to engage a board, what the board should look like and the role it should play in setting the strategic direction of the business.

One of the sector-specific sessions at last week’s Australian Governance Summit explored the range of options and opportunities available to family businesses and what they should consider when implementing formal governance structures.

The session featured a presentation by Andrew Mostyn FAICD and a panel discussion with Dr Patricia Kailis AM OBE FAICD and Amanda Kailis GAICD on what it means to set up, inherit and help a family business grow.

Both the Mostyn and Kailis family businesses operate out of Western Australia, most often in very remote areas, and they understand what it means when family and business collide.

Mostyn, now WA chairman and director of the National Board of Family Business Australia and executive director of the Craig Mostyn Group, a leading diversified food and agribusiness, shared his lessons learnt from his family business, citing “having a good and strong culture across the management and staff” as key factors to the success of any business. But for a family business in particular, it is important to establish formal systems to manage its unique dynamics, as is appointing qualified family members.

People often ask me if the family is more important than the business, or is the business more important than the family. My advice is: look after the business. If you look after the business, the family will prosper.
— Andrew Mostyn FAICD

These principles were echoed by the Kailis family, whose family business was founded on four key values – honesty, loyalty, trust and compassion – in 1960s Western Australia.

Dr Patricia Kailis AM OBE FAICD, a pioneer of her time, is an accomplished neurogeneticist and founded MG Kailis Group with her late husband Michael. She has seen it grow, having established the lobster industry in Dongara, then the prawn industry in the Exmouth Gulf, followed by a pearl farm and jewellery business with beginnings in Broome. Patricia now serves as the governing director of MG Kailis Group. Her daughter, successful commercial lawyer Amanda Kailis GAICD, serves as a director on the board.

The two recounted stories of trying beginnings for the business that involved sourcing their own water, managing their own sewerage system, laying roads around their factories, building their own home and setting up their own store for supplies in remote parts of WA.

We started with a concrete slab and built up the business from there. We became known for operating in remote areas.
— Dr Patricia Kailis AM OBE FAICD

For a successful family business, the Kailises say “connections, contacts and negotiations all help to establish great advice. Be honest and do what is right.”

Andrew Mostyn

Why is a board beneficial for your business?

At the summit, Andrew Mostyn FAICD shared why boards are beneficial for family businesses:

  1. Building the confidence of shareholders
    Boards, particularly with a non-executive chairman or members from outside of the family, offer independence and add a level of trust for shareholders who do not work in the business.

  2. Keeping the management team in check
    Boards traditionally bring a level of scrutiny and accountability to the management team in regards to the day-to-day running of the business.

  3. Diversity of thought and experience
    Boards bring with them new ideas for the business, particularly around its strategic direction.

  4. Board-CEO relationship
    Having a non-family CEO is a means to manage the dynamics of a family business. The board can make life both easier and harder for a CEO, but it is important to keep it professional.

  5. Good governance
    Having formal company and governance structures can ensure private businesses do not look inwardly and keep the conversations about the business and long-term strategy strictly professional.

Read Family business – getting the best of both worlds for more on Andrew Mostyn’s story.