Companies & Industries

Strauss Group: Family-Controlled, Board-Approved


Chairperson Ofra Strauss and BW's Bev Behan discuss how the food manufacturer values and encourages advice from its board, and can thus recruit high-quality directors

Imagine an energized boardroom filled with experienced, accomplished businesspeople offering different perspectives—and sometimes contrary viewpoints—relative to their oversight of a rapidly growing multinational company. Listening to these board members, who often speak in very passionate tones, you quickly realize that this is the type of board that provides real value for a company, its stockholders, and its senior management team.

You might expect this to be the boardroom of a high-tech startup. But in fact, the board I've just described oversees a family-controlled company founded by the grandparents of its current chairperson, Ofra Strauss. The Strauss family controls nearly 75% of the Strauss Group's stock, the balance of which is publicly traded. Strauss Group (STRS.TA) operates in 14 countries and is best known in the U.S. for Max Brenner Chocolates and Sabra Salads.

Boards of family-controlled companies are traditionally (and often justifiably) thought of as passive groups who merely rubber-stamp agenda items. In contrast, the board of the Strauss Group has a track record of asking tough questions—and even halting major deals. I have consulted to the Strauss board for the past two years, so I've had the chance to see the directors in action.

When I recently asked one senior Strauss Group executive about the board, he told me: "In this economy more than ever, we can't afford to make mistakes. Our board is one of the most valuable resources we have." Ofra Strauss recently spoke with me about the board of directors. Edited excerpts of our conversation follow:

What do you see as the differences between the board of a family-controlled public company and a widely held public company?

I don't see any differences. I want experienced people around the board table who genuinely care about the company and give us their best advice on the myriad issues we are dealing with. The last thing we want in our boardroom are "yes people." We want board members who are not afraid to challenge our ideas and raise concerns [and offer points] of view that we may not have thought about.

That is where a board can make a real contribution for shareholders—be they family shareholders or public shareholders. In our case, where the majority of shares are controlled by our family, I see the board as playing an important role in helping to protect our company and our assets.

How have you put that philosophy into action with your own board?

One important step involved clarifying expectations about what we wanted from the board. Two years ago, we conducted a comprehensive board evaluation process. This exercise was designed to pinpoint where the board was functioning well and where the board could be even more effective going forward. One of the directors said, "Because this is a family-controlled company, unless I really see things going over the cliff, I don't think I should interfere." I made it clear that I didn't want the board members to hold back until something extreme arose; I wanted them to bring their best advice into every board meeting.

What have you done, as chairperson, to create the energized dynamic that characterizes your board meetings?

It's one thing to tell your directors that you want them to get engaged, but it's quite another to set a tone in your meetings that fosters constructive engagement. One of the most important things you must do is really listen to your directors—both in the boardroom and outside of the meetings. This lets them know that you want to hear their perspectives and that they are making a contribution to the company.

We recently repeated the board-evaluation process and one of the suggestions that came out of it was to have some brainstorming sessions with the board—informal opportunities to engage the board on key issues in a more unstructured format. We are going to experiment with this in the coming year. The tone that you set in the boardroom impacts the overall tone of the company and its culture. If you want a corporate culture that is open, transparent, and professional, you need to set the same tone in your boardroom.

The people serving on the board genuinely like each other. There is also sincere mutual respect between the board and management. I think these are all critical ingredients to creating a positive boardroom environment.

You recently added four outstanding new directors to your board. When you were recruiting them, what issues did they raise about joining the board of a family-controlled company?

The family's ownership of the company was an asset in recruiting directors. The people we approached about serving on our board recognized that we, the family, are committed to the long-term sustainability of our company. It's our name that's on the door of the company and on its products.

The reputation of the company and our senior management, the track record of corporate performance, the governance processes we have put in place—these were the most important considerations for the directors we recruited.

At the same time, there was one concern that nearly everyone raised in the recruitment process. Our family owns nearly 75% of the company's stock and clearly controls the decision-making. They wanted to make sure that we were looking for a real contribution from the board; they had no interest in being part of a board that was largely window dressing. We were readily able to satisfy concerns on that front, particularly when they spoke to directors who had been serving on our board.

Beverly Behan is the managing director of the Board Effectiveness Practice of the Hay Group and co-author of Building Better Boards: A Blueprint for Effective Governance.

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