Family governance institutions help strengthen the family harmony and relationship with its business. By allowing family members to get together under one or more organized structures, family institutions increase the communication links between the family and its business as well as provide opportunities for family members to network and discuss aspects that can be related to the business or the family. These organized activities help increase understanding and build consensus among family members.
Family members should be well informed about the purpose and activities of any established family governance institutions. It is also very important to make sure that family members distinguish between the role of these institutions and the governing bodies of the business such as the board of directors and senior management. This can be achieved by developing written procedures for these institutions and sharing them with all family members.
Further, you will find a description of some family governance institutions that a family business might have. Of course, not all family businesses need or must establish all of these institutions. Deciding what type of institution to establish will depend on the size of the business, the family’s stage of development, the number of existing family members, and the degree of involvement of family members in their business.