Ownership Governance

Ownership governance addresses issues that are best discussed by the owners personally. These issues would not be appropriate to discuss within the family or within the business, because not all members of these groups are owners. Therefore, it may be appropriate to set up shareholder assembly or ownership councils.

The owners are often responsible for the highest level of governance. This includes determining the vision and the values of the family business, as well as hiring the correct directors to fulfill them. Thus, it is crucial that owners understand the business and the market very well.

For intergenerational family businesses they will go through many different stages of ownership as they grow and evolve and as such the ownership governance structure must adapt to changing generational dynamics.

  • In the “founder/owner” stage, the founder and owner take the key steps in determining the initial management and ownership structure of the business.
  • In the sibling partnership” stage, the children become more involved and it must be decided who will most actively and competently take on a management role, and who will take a more passive ownership role.
  • In the “cousin consortium” stage, even more family members become involved, which leads to a variety of differing interests, needs, and votes from all the family members. This is often where a more formal management structure must be developed, including the need for outside help, and some family members transitioning from control to ownership roles.