What is Family Governance and How To Get Started
Creating a strong family identity starts with implementing effective family governance. This begins with developing a shared family vision, laying out clear rules and expectations, and establishing effective communication protocols among family members.
Define your Goals & Objectives
Before getting started with family governance, it's important to define your goals and objectives as a family. This helps you to articulate what it is that you want to achieve and how you will do so. Ask yourself: What do I want for my family? How can we succeed together? Writing down these goals allows everyone to be on the same page, strengthening the collective identity of the family.
Use this step as an opportunity to discuss what the family stands for and how they can reach success. What values are important to your family unit? By having informed discussions about these topics, it will help you create an effective governance system that reflects the values of your entire family. Additionally, remember to stay flexible and open-minded during this process. A governing system is not meant to be rigid, so it's helpful to revisit your goals and objectives from time to time in order to adjust or revise them as necessary.
Have everyone involved in the family governance process. It’s important to include as many members of the family as possible, as diverse insights can help create stronger and more successful governing systems. Furthermore, make sure all your family members are actively engaged throughout this process by taking turns leading discussions and brainstorming ideas together. Once you have established your goals and objectives, it’s time to move on to the next step: creating rules & regulations that will help uphold them.
Establish Decision-Making Structures and Communication Protocols.
After you've established your family's goals, the next step towards family governance is to establish structures and protocols that insist upon a collaborative decision-making process. Creating an organized structure of communication between family members will help build trust and respect. Set up methods of communication, such as a weekly or monthly family meeting, where everyone can voice their ideas and come to an agreement. And make sure every member of the family has a chance to be heard.
Establishing these comprehensive structures is key. All family members should be given the opportunity to discuss and make decisions on any issue that affects their lives. And in a family governed system, there can often be multiple decision-making roles - from formal voting to informal consensus - based on the context at hand. Make sure everyone knows their role and expectations ahead of time so that there are no surprises down the line. And provide access for every family member, especially youth, to broaden perspectives at the table.
To ensure efficient communication throughout the family, establish channels and strategies that are accessible and allow for an open exchange of ideas. Simplify the discussion process by utilizing technology such as Slack or Zoom which provide features like video conferencing and file sharing. Additionally, foster an environment in which every individual’s opinion is respected to ensure meaningful and comfortable conversations. Establishing clear decision-making structures and communication protocols will create a positive flow of communication within the family unit and lead to successful family governance.
In short, family business consultants provide a wide range of services intended to ensure a successful future for the business. These services include conducting financial reviews, providing strategic planning advice, and developing individual and group leadership capabilities. With the help of a knowledgeable and experienced consultant, families can develop the skills — and confidence — they need in order to bring their company to new heights of success.
Establish Ownership, Residency and Financial Strategies.
When planning a family governance structure, consider who should own family assets such as businesses or properties. This can be done through trusts and partnerships, but you also need to think about where family members should live and what strategies will ensure financial security across generations. Establish an inheritance plan, create a plan for the division of wealth among family members based on their contributions to the family business, set aside money for charitable causes and other expenses. Finally, take into account taxes and inflation in your financial strategy so that your financial goals remain attainable.
Family governance should also include rules of engagement on how decisions will be made. Establish clear roles and expectations for all family members participating in the business or living in the residence, so that everyone is involved in decision-making. Clear communication between family members helps to prevent misunderstandings about ownership and responsibilities. Finally, review your strategies regularly with professional advisers—legal and financial—to ensure that they are up-to-date with changing estate planning needs. With these strategies in place, families can be sure of their lasting success for generations to come.
In order to create a successful family governance plan, it is important to establish policies that define ownership and residency criteria for family members. It is also necessary to determine the financial strategies which include who will fund investments, how much capital each generation will require, and what banking arrangements are in place. These factors should all be discussed and agreed upon as part of your implementation plan. By developing clear ownership and financial rules, you can ensure that decisions are made with full engagement and understanding from family members. Additionally, a strong governance plan allows families to build sustainability through succession planning that outlines roles and responsibilities for future generations.
Develop Rules of Engagement & Define Roles & Responsibilities.
One of the most important steps in forming a family governance structure is to establish rules of engagement. Decide how family members will communicate and share information, as well as set parameters for conflicts, disagreements, and other difficult topics. Establish how decisions will be made and who within the family has authority to make them. Additionally, create a structure that outlines roles and responsibilities so that everyone knows their place in helping to achieve the family’s goals.
Establishing roles and responsibilities is like creating job descriptions. It spells out who should do what and often on what timeline. Depending on the leadership structure of the family enterprise, it defines who has final say or authority in decision making. Specifying roles gives each family member a clear understanding of their involvement in the business and helps avoid any potential confusion or conflict among family members down the line. Being clear about expectations from the outset allows everyone to have input, take ownership, and understand their place within the family’s governance structure.
When it comes to family governance, these expectations should be clear from the start. It is important for family members to be open to discussing their individual or collective roles and responsibilities regarding how decisions will be made and how communications should take place during family meetings. This means defining the rules of engagement, establishing a lens of understanding between all parties, and making sure everyone participates in decision-making processes. Communication protocols should also include documenting decisions that require action. Without proper communication protocols in place, it can be difficult for family members to agree on needed solutions or process changes over time. It is essential for success that families continue to maintain lines of communication among each other as issues arise or changes need to occur within the business or its governance structures.