Family Governance can be understood as a three-step process.
Understanding various stakeholders’ requirements: Different family members would have different needs, and all of them may or may be aligned with the business and its needs. It is crucial that the process includes taking into account all members’ concerns.
Building cohesive policies, processes and decision-mechanisms with oversight and accountability: This would also include establishing how family would deal and further the common vested interest- the family business. The degree to which each family may want to formalise their inter-se rules would be different. A written down charter or a constitution is preferable to have.
Continuous monitoring: A governance process without an oversight mechanism would be like a toothless tiger. Thus, building in control mechanisms is also a vital step.
Essentially, the fundamentals that Family Governance seeks to put in place are transparency, communication and family-business alignment.
With globally accepted research work establishing low rate of survival of family businesses, Family Governance has come to be seen as a fundamental element for ensuring not only smooth inter-generational transition but also longevity and sustainability of business.
We have been assisting clients with governance through creating family constitution, establishing and operationalizing family councils, establishing decision making mechanisms and providing risk management and regulatory advice among other elements of governance.