The Australian Small Business Blog

Friday, October 31, 2014

Clive and Anna Palmer – Married to the Business

by Dr Greg Chapman

Earlier this month, Clive Palmer’s wife announced that she would be a candidate in a preselection contest for the next Queensland election for the Palmer United Party for a Gold Coast seat. This prompted a call from the ABC for an interview with me on the topic: that if Anna became selected and elected, she would be in business with her husband, and what tips I had for them, as well as other couples in business together, on how to run their business.

Unfortunately for Anna, she wasn’t preselected (perhaps she dodged a bullet), but on the positive side, she is on the executive committee, so she is still ‘Married to the Business’. In preparing for the interview, I discovered that the Palmer United Party was truly a family business.

The Interim Executive Committee is chaired by Clive of course. Anna is the treasurer. Clive’s son is the president. The other members are nephews.

Under the rules of their executive committee, the Chairman “is fully authorised to exercise all powers of the Interim Exec¬utive Committee” so it is unclear what the role is, if any, of the other committee members. In a normal board, the chair is just the first amongst equals, with the board making decisions together. The CEO is then empowered to implement the decisions of the board and run the organisation. Good board practice is not to have an executive chairman, with the role of CEO a separate one. This is the normal situation in the major political parties, but it appears not to be the case for PUP.

Further, all members of the board are legally liable, jointly and severally for performance of the organisation. This makes the separation of roles very important, as the board has the authority to sack the CEO for poor performance, which is extremely difficult with an executive chairman. If the CEO can’t be sacked, the only way that a director can avoid legal responsibility for the performance of an organisation is to resign from the board.

Board roles must be clear, particularly in a family company where it is easy for responsibilities to become blurred. As a result, it’s common to include non-family members in non-executive roles to hold family members to account.

In the case of PUP, if Clive takes all the decisions, his family members are still legally liable. Not a comfortable position for a family member, given that Clive seems to be spending a lot of time in the courts lately.

Of course, I don’t know what happens inside the PUP executive committee, and all may be sweetness and light with rules rigorously followed, but my advice would be to family members is to remember, they all share responsibility, and perhaps a few external non-family members should be included in the committee. (Note to Clive: I am not touting for this role!)

May Your Business be - As You Plan It.

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Dr Greg Chapman is the Director of Empower Business Solutions and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success and Price: How You Can Charge More Without Losing Sales.

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