Family Governance is a topic that most families are reluctant to address. It covers two broad topics: governance of the business and governance of the family. Most family businesses, especially in the formative years, take on the characteristics of the founder or founding family. Although this entrepreneurial model works for an early stage family owned business, as the company grows in size it needs gradual evolution to a different model. Board of Advisors, Board of Directors, and Professional Management are some of the ways to improve the governance and performance of the business.
Family governance is a more subtle topic. Most families find that as they grow there is a need to formally discuss family issues like estate plans, family business leadership transition, and family fairness. Families find that some of the best venues to do this are through Family Councils, Family Retreats, and formal Family Meetings.
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+ Board of Advisors
When the family business grows so the leader finds that it is beyond his sole expertise to handle all aspects of the business, it is usually time to form a group of trusted peers into a Board of Advisors. A well conceived and run Board of Advisors can be invaluable to a company – many say that the most important step in their company’s growth and evolution was the addition of a Board.
+ Professional Management
Although family businesses often desire that key management positions are staffed with family members, sometimes they are not interested, not qualified, or are engaged in other worthwhile vocations. This is the time to hire professional managers who bring their experience and business acumen to the family business. Professional managers often improve overall performance and are also useful in providing “bridge management.” For example, when the next generation of family leaders are not quite ready to take on senior management roles, bridge managers can provide a connection between generations of family along with mentoring, guidance, and coaching.
+ Family Council
Family councils provide families with a vehicle to entertain family projects and resolve issues. Some of these include developing Entry Criteria for new family members to enter the business, chronicling the family history, and ensuring that family fairness is considered in family and business decisions.
+ Family Meetings
Formal, scheduled family meetings inform family members of both the status of the family and the family business. Family members can reconnect with one another, and family issues can be discussed constructively rather than being left to fester into larger issues.
+ Family Retreats
Family retreats are conducted over two to four days at off site locations. They provide a neutral venue to discuss family and family business items.
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