Business families, and families with wealth, eventually need to develop and apply some rules by which to operate, so everybody can get a fix and a reality check on their personal and collective expectations and obligations, as core guidelines to help avoid conflict.
Governance is a system of processes that combine philosophy, practical intent, ethics, best practice processes and responsible supervision to ensure that an organisation does the right things, in the right way, at the right times. As a formulated, declared, integrated system it’s almost the exact opposite of autocratic rule, which relies on individuals to keep things going – the individual usually being the family’s patriarch, matriarch, or both.
The idea of “Family Governance” – applying formal behavioural requirements to a family group – probably seems weird. Don’t families embody all that is loving, trustworthy, reliable and responsible? Well …..it depends. And sometimes …… to be brutally honest …… no, that’s not what we find.
To make things worse, many families don’t have a strong disciplinary backbone, especially where adult children are concerned. The rules of the jungle that were OK (ish) at home during the growing up years are entirely inappropriate in a business environment, and when family members interact with each other they may not realise that to everybody else’s eyes they’re playing out their personal antipathies, petulantly and childishly, rather than acting appropriately and professionally, in a businesslike way.
When families involve family members in their business activities, they heighten the hierarchical, competitive, egotistical and financial factors that are almost always swirling in almost every family. Overlay these on the emotional baggage we each carry around, and you have a formula for bad behaviours, and worse outcomes, at work.
Family governance, like all other forms of governance, comprises certain factors:
- Guidelines and rules based on objective, external benchmarks.
- An identifiable body with the responsibility, authority and will to implement, monitor and enforce the rules.
- A family group that’s prepared, or obliged, to be subject to those rules.
- A tangible body to develop the rules, and to implement those rules.
A Family Council is ideally suited to the task. See Family Council for more details.
The key question for the family is this: “Do you have the ticker for the job?”. Do you have the courage to recognise your need, and to respond constructively to that need? And then, do you have the disciplinary backbone to act as you may need to act in the event any family member is in breach of your rules?
If the family can answer “yes” to these questions, they should be able to introduce, enforce and benefit from family governance.
For help establishing your own Family Governance system, please call, or contact: The Solutionist Group.