Family businesses evolve with a blend of family dynamics, business operations, and ownership, leading to blurred lines. This may result in unique challenges, paradoxes, and dilemmas. In the absence of governance, these issues often escalate into conflicts.

Unaddressed conflict may cause both the family and the business to suffer to the point of disintegration. Disintegration may be avoided by the adoption of early governance education and structures.

What is governance education?

Governance education revolves around understanding:

• Principles of fairness, accountability and transparency.
• Family governance structures such as the Board of Directors, family councils, constitutions, employment policies, and other key policies.
• Decision-making processes, conflict resolution mechanisms, and ethical standards.
• Clarifying the expectations of family members regarding roles and responsibilities.

How does governance education help?

Governance education helps the family:

• Appreciate the nuances of the family business.
• Build clarity around roles and expectations resulting in reduced conflict.
• Better prepares the family for responsible stewardship by encouraging merit-based participation and accountability.
• Improve decision-making by learning to separate business needs and family needs.

Holistically, governance education empowers the family with the knowledge and skills necessary to handle the many challenges that come with being part of a family business.

How do families receive governance education?

Families can receive governance education through both formal and informal approaches, depending on a family’s needs, stage of business, and generational composition. Formal approaches are structured and facilitated by external experts such as advisory firms, university programs, and networking organizations.

Informal approaches may include creating a culture of learning by sharing family business best practices and networking with well-governed families.

When is the best time for governance education?

It is never too early to start educating the family on governance. The cost of neglect is often paid in fractured relationships and poor business performance. For family businesses, now is the time to create a governance learning culture. Not sure where to begin? Start the conversation at [email protected] or consider enrolling in our upcoming Family Biz Next Gen Engagement Program to empower your family with the necessary knowledge and skills for a sustainable business.