Developing consciousness for Institutionalisation of Family Business   

By SOCH Business Mentors LLP Posted September 5, 2023 in Family business

Developing consciousness for Institutionalisation of Family Business   

Building a constitutional system is the first step

Family-owned businesses have a powerhouse of family behind them. A family creates an endless legacy perpetuating prosperity, community welfare, love, and harmony.

Legacy begins with the first generation. The family must begin institutionalisation to grow beyond the 3rd, 7th and 20th generation.

The first step for this is to draft your family constitution.  

Sometimes, the family takes decades to decide on beginning the process of institutionalisation. Reasons include silent fears, long-standing dilemmas, confusion, and feeling of losing control.

The above reasons, in most cases, make families lose the most rewarding time to begin the process. Some families educate their heads and hearts when the first generation ages 35 to 40. The present or current generation with siblings or cousins or both, must have an average age of 26 or 30. This gives superior advantage to the family and enterprise for its institutionalisation efforts. The chances of success grows if the current generation shares a sense of family identity.

The key for taking steps for institutionalising a family isn’t for wealth. 

Wealth is a by-product that grows, preserves and prevails with an institutionalised family enterprise.

A family constitution is not about wealth.  

A family constitution holds broader and wider spectrum than wealth.

A family constitution with its system is for continuity of creation of wealth, preservation of wealth and prevailing the wealth.  

Hence it is not about wealth itself as much as it’s about perpetual continuity of it.

A constitutional system must be seen as a timeless, overarching system for fuelling a balance of love, harmony, and prosperity. It helps balancing ambitions and family harmony. It helps acheive giant ambitions not at the cost of harmony. Instead, it balances harmony like a piece of master art to help the family never let the love fade away for generations after generations. 

A system that helps family members build perpetual legacy one-day-at-a-time without failing. This way it creates lasting legacy using a golden thread of values. Thus, unleashing family identity to its full potential for eternity. 

In a nutshell, the intention and energy of the family to institutionalise itself must focus beyond just wealth.

Once there is a fundamental energy of intention, questions the family must ask itself are: 

  • What is your benchmark comparision to decide when to begin?  
  • Do you acknowledge and accept your current point? Are you aware of the challenges that you will face during the institutionalisation process? 
  • Is your prime motive wealth or building an institution that creates lasting legacies? 
  • Is money and power part of your intent in defining the scope of an institutionalised family? 
  • Have you considered internal power battles while taking steps towards an institutionalised approach?
  • Is your fraternity ready to evolve? It is okay to be afraid and not be sure of the same. Still, a willingness to evolve will be key. The process of institutionalisation must increase support to evolve the family.
  • Have you considered the voice of women of the family for the eternal life of a family name and its prosperity?

…many more readiness and truth-based freeing questions that you must not avoid. 

Indeed, the above questions and write-up help raise awareness and consciousness. For deeper consciousness, let’s understand – What defines a successful or unsuccessful institutionalisation approach? 

What defines a successful or unsuccessful institutionalisation approach? 

The most obvious indicator is completion. All parties must sign the family constitution or at least the majority. Some families, at times, abandon the process of constitution-making before its completion.

Mark it, having a signed constitution does not ensure success. The constitution’s content built through a process is key.  

The most obvious indicator is completion. All parties must sign the family
constitution or at least the majority. Some families, at times, abandon the process
of constitution-making before its completion.

Mark it, having a signed constitution does not ensure success. The constitution’s
content built through a process is key.

The process is a make or break. The content quality is the secondary indicator of whether it will succeed or fail. 

The risk of reaching the completion, signing, and yet not able to live is an extreme threat. Hence, the process design eliminates this threat of not being able to live.  

The process design & delivery imbibes and inculcates constitutional practices in every member.

Having a constitution is one thing, and living it is completely different.

But once you have it, efforts to make it ‘live’ worthy are usually a recipe for disaster. You should avoid such short-sighted approaches.  

Focus on living readiness, as the readiness will never come after the constitution is completed. It will only come during the process of making the constitution. 

The family constitution is unsuccessful if it is not completed, or signed, or its content is ill-constructed, or it’s not lived & applied by family.

The experts of constitution process knows a well-built, process-led constitution requires implementation.

Without constitution implementation, it will remain just a paper exercise. Hence, family governance is vital for constitution to come alive.

The worst result of an un-implemented family constitution is that the family becomes cynical and hardened about the capacity to grow, change, and perform. Most family constitutions fail not due to lack of skills or hidden motivations but for more innocent reasons of a poor process.

It cannot be too business-driven, and it must have a serious underpinning of soft human emotional, cognitive, mental, relationship and even spiritual elements.  

The significant success of the process will happen only when it focuses on strengthening the family. Which in turn requires the process to hold deep cognizance of individuals in the process and the family as a sum of all individuals.

Individuals when grow and find themselves maturing in the process invest themselves full. They invest further their emotions, mind, and spirit. This increases their sense of ownership for an institutionalised family. This rewards with significant benefits success of developing constitutional system. 

This sense of ownership is priceless.

It helps individuals to grow their full potential and while doing so, helps family at large to take its roots and spread further.

Hence, the process must support all heads, hearts, and souls to unite in oneness while encouraging individuals to contribute their views unique to their thinking, beliefs, and ambitions. 

The process is far more important than the content.

The process cannot ignore the importance of giving members time for reflection, digestion, and comfort. When the process runs fast, family members cannot feel the ownership of its results. Owning increases living-ability of the constitution.  

The design characteristics of the process must customize with the family’s vichaardhara (thinking), and mental & emotional DNA.

Once you have developed enough thought and feelings around contemplating the above – your efforts will be benefited by your gained consciousness.