Effective family governance serves to:
- Strengthen bonds
- Create a forum for developing family protocols
- Help family members to realize a common future vision for the family and for the business.
Generally, depending on the size of the business, the formality of the family governance structure increases. In smaller businesses, it is more typical to govern through regular meetings and forums. In larger businesses, there is often a family assembly and council, or a family board.
A family assembly is the highest level of decision making in family governance. A family assembly consists of all the family members, and serves as a forum for family members to meet and discuss or learn about the business. The assembly also elects the family council, which is crucial to family governance.
A family council is a decision-making group composed of representative family members. The council is elected by the family assembly. A family council primarily focuses on family development and continuity. This is especially crucial as the business grows, so that it does not lose sight of its primary vision. Smaller businesses often do not require a family council, but it is important to establish one early in the growth process.
As you can see, effective decision making is key to family governance. It is important that a system is developed that is in line with the vision and values of the business, and that allows for collaboration between the family decision-makers.