Family Governance

Family Governance is a topic that most families are reluctant to address. It covers two broad topics:

1. governance of the business and
2. 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 complex topic which is exacerbated by our cultural leanings of having hierarchical families where most communication is downwards – e.g. father to son, and very little of it in the reverse direction. 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.

“Children must be taught how to think, not what to think.” – Margaret Mead

As shared above by famous anthropologist, Margaret Mead, it is the ‘how’ that matters more than ‘what’. Family governance focuses on encapsulating the ‘how’ as represented by its unique values and beliefs. The focus is on documenting what is usually assumed to be understood. Our team of expert advisors can help you develop and implement customised strategies optimised for your family.

Evolving a Business Governance for the next generation

A chain is only as strong as its weakest link.”

The focus on creating an equal outcome for all children may lead to sub-optimal choices for family businesses, leading to the most famous saying – “from shirt-sleeves to shirt-sleeves in 3 generations” or as Marwaris put it – “the life of a palace is 60 years”.

A lifetime of managing the business, especially by the first-generation entrepreneurs, usually leads them to conclude that their children will mold themselves into the existing pattern of doing things, not realising that they have their own distinct mental make-up.

Business Governance focuses on smoothening the business transition from one generation to the next to ensure that any weak link is, as far as possible, strengthened adequately by transitioning structures to accommodate these generational differences.

Our team can assist you with evolving Business Governance strategies. Call or email us for further discussions.