When a founder heads a family company, it is clear who exercises the owner’s vote. But how to find a common voice when there are five second-generation and 13 third-generation owners? Finnish Family Firms Association’s Executive Director Auli Hänninen and Aho Group’s Board Chairwoman Miia Porkkala discuss owner strategy.
Owner strategy is determined by the owners’ shared ground rules as well the direction in which the owners wish to steer the company. What is the objective and which values are important? What earnings are expected from the company and what level of risk? How responsible should the company’s operations be? What aspects to develop, and how much to invest in them?
Miia Porkkala and Auli Hänninen both believe that if there is more than one owner, it is important for owners to find a common voice. In the case of Aho Group, there are five second-generation owners and numerous companies. The family discuss objectives regularly, and are always crafting some element of strategy or another.
“When the board of directors know what the owner wants, it’s possible to operate consistently towards clear targets,” Porkkala says.
“Owner strategy is also needed to draw the boundary between the area that belongs to the owners and the operative area. The company founder didn’t necessarily need to form such a boundary, but it’s sensible for the next generation to define it. Once done, no-one needs to wonder what is within their sphere of authority,” Hänninen points out.
“Issues associated with the risk position form an important element of owner strategy. It’s easier for the board of directors to operate when it knows the solvency target, the desired level of operating profit, and whether the owners are willing to grow the company or aim to improve the current operations,” explains Porkkala.
Everything must be open to discussion
In finding the owners’ common voice, it is important that nothing is simply assumed. Matters must instead be discussed and agreed together, making sure everyone’s opinion is heard.
“When the owner strategy is made among the family, issues can arise – especially at first – that have formerly been swept under the carpet. An issue could have been sidestepped for two generations, but it can still impact the company’s culture. It must be possible to discuss matters, because that’s the building block on which trust is built,” Porkkala says.
In an ideal situation, family members would be able to speak their minds freely even if they disagreed. Discussion is the only way to find common ground that everyone can commit to.
“If things are swept under the carpet, ultimate commitment to a common strategic intent may not be found, nor necessarily will matters proceed as agreed,” adds Hänninen.
Owner strategy is a living document
Aho Group’s sibling owners address ownership issues seven times a year at four-hour meetings and twice a year at two-day strategy planning events. Participating non-family officers are Aho Group’s CFO and, acting as Board Secretary, Aho Group’s General Counsel. Non-family participants give the meetings structure and a sound framework.
Aho Group’s first owner strategy extended to 2015 and the current one extends to 2025. The most recent strategy now includes, for instance, a specification of corporate governance for the family and for the companies. The third generation’s programme was incorporated as a new component.
“We consider the companies to be on loan to us from future generations, so generational change is always on the table. Children and youngsters attend our owner meetings, and take an active part in them as and when they’re interested,” Porkkala points out.
Interaction instead of issuing orders
Hänninen believes it is good to have an independent officer, with no ties to the family, participating in formulating the owner strategy. Owners must be able to trust that he or she is on the company’s side and nobody’s stooge.
“There’s no right or wrong way to formulate owner strategy. Some companies prepare owner strategy using only in-house resources, some use external facilitators or attend training courses organised by, for instance, Finnish Family Firms Association. It’s clear that family firms regard owner strategy as important, judging by how much they attend our training courses,” she says.
When the owner strategy is finished, the owners’ intent must be communicated to the companies’ boards of directors. In Aho Group, that is the task of the Chairwoman of the Board of Directors – in other words, Miia Porkkala’s. She meets the boards’ chairpersons at least once a year, and also once a year attends board meetings to set out the owner strategy. She does this despite the fact that there is usually an owners’ representative on the board of directors anyway.
“Ownership steering is about interaction, though, not about issuing orders. It can also happen that a matter is referred back from the company’s board of directors to we owners for more specification or clarification,” she says.
“It’s important to distinguish owner strategy as entirely different to business strategy. They address different matters and they cover different time spans. Nevertheless, the company’s strategy cannot conflict with the owner strategy,” concludes Auli Hänninen.
Photos: Junnu Lusa
Who she is: CEO of Family Business Network Finland since 2017.
Education: LLM and eMBA from University of Turku, Finland.
Earlier work experience: Altogether 14 years as service director and CEO of the General Unemployment Fund YTK, or “the dole” in British slang.
Who she is: Chairman of Aho Group’s Board of Directors. Board member at Aava Terveyspalvelut Ltd, University of Lapland and Business Finland. Also Chairwoman of Nordea Rahasto Ltd.
Education: MSc (Econ) from Helsinki School of Economics and Business Administration, MBA from EDHEC Business School.
Earlier work experience: Started her career as a ski instructor at Ruka. Worked in various business development positions, and was CEO of Rukakeskus Ltd for 14 years.
Finnish Family Firms Association
What it is: An interaction network, lobbying organisation and professional services & training body for Finnish family-owned companies and owners with a face.
Members: Altogether 456 corporate members employing a total of 174,000 people. Aggregate net sales amount to EUR 35.4 billion.
Operations: The Association offers its members training, professional and specialist events, networking opportunities and consulting services. It also lobbies on behalf of Finnish family entrepreneurs.
Mission: We build sustainable Finnish ownership.
What it is: Aho Group is a Finnish family business active in the tourism and healthcare sectors. Subsidiaries include Ruka and Pyhä skiing centers in Northern Finland as well as Medical Center Aava, Medical Center Pikkujätti, Uudenmaan Seniorikodit and Docrates Cancer Clinic, which attend to their patients’ health at different stages of life. The Group employs over 1,000 dedicated professionals. Of these, some 250 work in the tourism business.
Birth and history: Juhani Aho, a physician, together with some friends, co-founded Helsinki Center Aava in 1964, which later became Medical Center Aava. In 1972, Aho bought Rukatunturi Ltd, which he developed into a diversified skiing and tourism centre. In 1988, the corporation acquired Pyhätunturi’s skiing centre operations and Hotel Kultakero in Pelkosenniemi, Lapland.
Ownership: Eila and Jussi Aho’s five children. Kari Jussi Aho is Chairman of Rukakeskus Ltd’s board of directors, Miia Porkkala is Chairwoman of Aho Group’s board of directors, Annakaija Lappalainen is Medical Doctor in Charge at Women’s Aava, Antti Aho is CEO of Aava Terveyspalvelut Ltd, and Ville Aho is CEO of Rukakeskus Ltd.
Net sales: The consolidated net sales of the companies amount to some EUR 125 million, of which about EUR 32 million is generated by tourism and EUR 93 million by healthcare operations.