A growing family and business needs to formulate strategies for better governance of the business as well as the family. Governance are set of guidelines, rules and processes that the family business is expected to follow for managing the business as well as family affairs. The objective is to run the family business on sound business principles and the family members to conduct the business in a professional manner and should follow prudent ownership practices. The objective is to have a smooth interface between the family and the business, which is rewarding for all.
Successful family businesses operate with strict internal policies and a clearly defined governance structure. They work on the business strategy for the future and execute it relentlessly. Roles of family members working in the business are defined well and the expectations from them are clarified in advance. Internal checks and controls are instituted in the business for better control and orderly functioning. Clear guidelines are defined for working family members, who are rewarded for their work contribution and for owning family members, who are rewarded through return on their investments.
The Family Business Governance system establishes the rules and creates the boundaries for the Family Business. Internal governance and control systems helps the family business operate professionally and compete in the market place on its merits. It creates boundaries around the areas to ensure internal discipline and fosters professional work culture.
“Governance is nothing but the rules of the games for different business stakeholders from family as well as non-family professionals on how the game of business should be played, who has what role? What boundaries to adhere to? What are the escalation mechanisms to resolve difficult and critical issues? it can be called as “The Family Deal - What is the deal in your family?”
Some of the important structures and roles which should be incorporated into a Family Business Governance Document are:
- Active and competent Board of Directors
- Advisory Board
- Family Business Council
- Chief Executive Officer
- Chief Financial Officer
If your desire is to attract professional talent and let them run your family business or you wish the family members working in the family business to adopt professional way of managing the business with responsibility towards business performance and protection of family wealth, then it is essential to have a Family Business Governance document in force. It establishes rules and mechanisms for resolving disputes and monitoring business on critical performance parameters.
Does Your Family Business Need Help?
With extensive hands on experience of assisting family businesses, we understand the wide variety of challenges that families face as they work together to build, grow and sustain a thriving family business generation after generation. Through orientation programs, one to one as well as common meetings, workshops, public talks, mentoring, coaching, Family retreats and private family business consulting services, we help family business owners chart their way through family business issues of all shapes and sizes.