Creating Effective Family Governance Structures

We assist families in creating both the architecture for Family Governance and its constituent document, a “Family Constitution,” which serves to connect the family’s core values and its commitment to future family control of the enterprise to the enterprise’s own core values and governance structure.

What is Family Governance and why create it?

Much has been written about family governance generally, and family councils in particular, but the reality is that each family creates family governance in its own way. The intimacy of shared family experiences that occurs spontaneously and naturally among siblings, their spouses and children, as well as across multiple generations, either at holiday celebrations at the grandparents’ home, on family trips, or enjoying a vacation home shared by the entire family, is the single best way to maintain family harmony and unity.  However, when a family reaches a certain size, generation and geographic span, maintaining connectedness among members of the extended family requires intention, planning and structure.  Moreover, when a large family is related not only on the level of common values and shared experiences, but also as owners of a substantial private business, the challenges to maintaining generations-old harmony and unity multiply exponentially.

How does Family Governance support and strengthen families who control businesses?

The basic premises for creating family governance are two: The first is that family governance can be developed as a process and a set of structures through which the extended family can ensure its members continue to enjoy each other, develop ways for the family to share time and experiences, and promote core family values.  It is a process to provide opportunities for the entire family [and at times sub-groups of the family] to come together to discuss shared values, air differences, plan future activities, determine philanthropic goals and celebrate passages separate from the ongoing operations of the family enterprise.  A family council, or other similar body, can take responsibility for planning events such as family assemblies or family reunions.  Even when the agenda for such events is totally social and pleasurable, providing assistance with the planning is likely to ensure that such events occur more often and with greater success.

When one turns to the second, equally important, reason for family governance, managing the “business of family,” the utility of establishing family governance becomes even more compelling.  Many issues arise in families who control businesses, which do not arise, complicate or confound extended family life in families who do not own companies.

Management of the business controlled by the family is the responsibility of the board of directors and managers.  But serious issues of ownership control arise often in family controlled businesses, and decisions on these matters are both the duty and the right of the family owners to make.

Even in the strongest families, emotionally powerful issues such as money, power and control can erupt into painful misunderstandings. Thus, establishing a family governance process where such issues can be addressed, mediated or resolved long before they become divisive, promotes the harmony all families seek and business owning families require.