How family governance can build a unique identity of family businesses to achieve continuity of growth for generations
How family governance can build a unique identity of family businesses to achieve continuity of growth for generations
Family Governance: A system for harmony, decisions, and growth
Family governance is a master system with structures and processes that the families use to organise and guide their relationship with their business. It is responsible for delivering the promise of the family constitution. When well-designed and properly implemented, family governance helps family businesses to create clarity, increase unity, make effective decisions, and build a more focused business.
Family Governance: A seed today, plant tomorrow & farm in a few generations
We see more family businesses interested in building a governance framework today than we saw 5 years ago. This need for having a family governance is a result of many challenges that family businesses face as a part of their growth journey. Challenges such as decision‑making, expansion of business, family conflicts, succession, role of family members in the business and similar.
One essential thing to remember while designing your family governance is that no governance will be successful without the foundation of the family constitution.
Family Governance: Effective family, Unstoppable business
A family governance enables:
Win with togetherness
Family members and their business owners get extremely clear directives which are timely, future-led and engages the spirit of the family constitution in full for the welfare of the family
Effective habits
Family members to develop daily and effective habits such as productive communication
Timely and bold decisions
Family members and business owners to make timely, relevant, strategic, and structured business decisions
Structured family meetings
Family businesses to hold time-sensitive, outcome-centric, and constitutionally aligned meetings
Managing emotions
Family members learn and grow to manage emotions effectively for inclusive and collective growth
Family education
Family members to know about their rights and responsibility of ownership, family history, values and legacy
Prepare future leadership
Family businesses to commit and deliver future leaders to continue their family legacy
Plan for ownership
Family members to establish and maintains an effective plan for family leadership role succession
Family culture
A culture that strengthens the family itself and its relationship with the family business
Strategic advantage
Family members gain the advantage to expand into new businesses faster, easier and better
Family Governance: Growing a family into an institution
Family Governance is a formal system with structure to help protect, preserve and prevail the beautiful informal of the family for generations to enjoy, nurture, grow in, cherish and mature. The institutional way and sense of running a family business is hence only for enhancing the informal within the family for longer than a few generations.
The institutional structure involves family boards, family councils, family assembly, and family administration center along some specialised need-to-have basis custom designed functions and entities. All these governance bodies are obligated to perform under a singular oath for prevailing constitutional promise of timeless growth, abundance, love, and happiness.
Like family constitution, no two families can have the same governance structure, systems and processes.
Family Governance: The structure, role, and outcomes
The family governance broadly and in general is made of the two key bodies:
The Family Assembly
The family assembly is a body consisting of all members of the family only including the council members. The key job of assembly is to debate on the broader future of the family and what truly matters as per its members.
Family assembly takes in consideration the constitutional teachings into solving real world problems the family is facing.
The family assembly operates with a family administration office that makes sure several obligations to consistently brew the spirit of family in everything the family members do.
The Family Councils
This family council is the key body performing the executive function when it comes to establishing the health of relationship of family with the business. The councillors are usually the legal owners of the business who are also the core family members. Family Councils hold responsibility for but not limited to the below enlisted:
- Build strategic advantage
- Family to world communication
- Risk and stake management at social and business levels
- Financial vitality, wealth creation, and identity management
- Asset, heritage and legacy management
- Security architecture, security governance for family’s future prosperity, endowment and legacy
- Communication and Identity governance
- Social capital governance
Summary
Family businesses face unique challenges as they progress on their multi-generational journey. To win these challenges and realise their aspirations, family businesses should reflect on taking a proactive approach towards making their family constitution, family governance, succession planning and family office. These four are the key pillars enabling the individuals, the family, their wealth, their legacy and the business to prosper and flourish for generations.