Family governance is a structured approach to managing family dynamics, assets, and ownership strategy, ensuring that all members are aligned in their shared goals . It involves setting up formal mechanisms for communication, decision-making, and conflict resolution, providing a clear framework for maintaining harmony and continuity across generations.
Ensuring a formal governance structure is in place is crucial for maintaining the integrity and long-term success of family-owned businesses and assets. Without it, it becomes harder for family members to navigate in the same direction and the opportunity for conflict and misalignment can arise. As soon as there is more than one decision maker, it becomes crucial to have a process to manage difference in views, agendas and priorities.. Families will require different levels of definition according to the complexity of the assets and the size of the family.
Below we provide eight essential best practices to help you build a robust family governance framework:
Effective family governance relies on regular and transparent communication to keep all members informed, engaged, and aligned with shared goals and values. Establishing formal channels and encouraging consistent dialogue, fosters trust and cohesion which are vital for the long-term success and harmony of the family enterprise.
Defining clear roles and responsibilities within family or corporate structures is essential to establish accountability and prevent confusion. Too often, family members are integrated in a structure without role definition, which causes them to spend quite a while understanding where their area of operation is and in worst cases, they end stepping on other people’s toes. Clearly defined roles help members understand their responsibilities, interactions within the structure, and reporting lines, avoiding inefficiency and conflicts.
A shared vision and a common purpose act as a guiding light for family ownership, providing a unified direction of travel. Developing these together foster unity, commitment, belonging, and mutual respect. A family mission statement encapsulating shared aspirations guides collective identity and long-term objectives, leading to emotional buy-in and better decision-making for delivering on goals.
Succession planning in family governance involves transferring ownership and leadership smoothly to the next generation by identifying potential leaders, providing education and mentorship, and setting clear criteria for succession. Planning ahead prevents conflicts, maintains continuity, stability, and helps to preserves the family legacy for future generations.
Becoming an informed and responsible owner requires continuous education and development in the context of the families assets. Preparing the next generation for future responsibilities involves enabling them to assess performance, define strategy, and make important decisions collectively. Actively developing the next generation in the knowledge of what they will own one day, ensures they can sustain family assets long-term and handle collective responsibilities effectively.
Difference is inevitable in any family, and therefore so are clashing views or priorities. Establishing structured conflict resolution mechanisms in families is essential in preventing disputes from escalating. Families must agree on resolution processes beforehand to navigate conflicts successfully, such as mediation, arbitration, or third-party guidance.
A strong commitment to governance involves establishing and maintaining formal structures, and processes to guide the family’s ownership strategy. This includes formalising communication and decision-making forums such as family councils, family meetings and family committees, as well as family documents that crystalise the interaction of the family and their assets, such as family charters, family protocols and family mission statements. It maintains discipline, accountability, and alignment with the family’s long-term vision and goals.
Once the family is clear on what they wish to achieve together and for the long-term, they should develop robust legal and estate planning to protect family assets and execute their ownership and succession strategies. This may involve trusts, wills, shareholder agreements, and tax planning to preserve wealth for future generations.
For further information about any of the insights shared above or to find out more about Bedrock’s Family Strategy and Governance services, please do reach out info@bedrockgroup.ch.
Author: Maria Villax, Head of Family Strategy and Governance at Bedrock
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