Business governance involves the structures put in place for decision making within the business. The main purposes of business governance are to:
- Clarify rights and responsibilities for key roles.
- Manage succession transition.
- Offer performance feedback.
- Provide fiduciary oversight.
- Support collaboration.
- Coordinate with family governance.
For most large family businesses, business governance is centered on the board of directors, who help to bridge the gap between the family and the business. The primary role of the board of directors is to ensure accountability of management and effectiveness of decision-making.
The Board of Directors should include an ideal mix of family and independent members. If a family business is too small to require a board of directors, they should engage in continuity planning through regular leadership meetings and open forms of decision making.