A growing family and business need to formulate strategies for better governance of the business and the family. Governance is a set of guidelines, rules, and processes that the family business is expected to follow for managing the business and family affairs. The objective is to run the family business on sound business principles. The family members to professionally conduct the business 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. The 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 compensations 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.

Family Business Governance system establishes the boundaries for the Family Business. Internal governance and control systems help the family business operate professionally and compete in the marketplace on its merits. It ensures internal discipline and fosters professional work culture.

In other words, “Governance are the rules of the game for different business stakeholders” – How the game of business should be played? who has what role? What decision making process? What boundaries to adhere to? What are the escalation mechanisms to resolve difficult and critical issues? It can be called “The Family Deal” – What is the deal in your family?”

Important structures which should be incorporated for better Family Business Governance are:

• Active and competent Board of Directors
• Advisory Board
• Family Business Council
• Chief Executive Officer
• Chief Financial Officer

If you desire to attract professional talent and let them run your family business or wish the family members working in the family business to adopt the 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. It establishes mechanisms for resolving disputes and monitoring business on critical performance parameters.

Does Your Family Business Need Help?

With extensive hands-on experience in assisting family businesses, we understand the challenges families face as they work together to build a thriving family business generation after generation. Through orientation programs, one to one and group 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.