Family governance is a framework for joint decision-making among family members based on shared values, a common mission or purpose, and a collective vision for the family's future. It can help families recognize and manage their wealth, define roles, set boundaries for individuals and enable members to manage competing and interrelated interests. If implemented successfully, it provides a platform to allow families to resolve conflicts that would otherwise lead to dissolution or sale of the family enterprise, the destruction of family wealth and a breakdown of family unity.
Typical issues addressed by a family governance framework include:
The roles, rights and responsibilities of family members
A system regulating the appropriate inclusion of the family in business discussions
The formation of a "family council" to oversee strategic decision-making for the business and strengthen business-to-family communication
The creation of family employment, development and compensation policies
The formalization of business relationships between family members
A mechanism to sell ownership interests
A succession process for leaders
Dividend and distribution policies
Many of these policies are often memorialized in the form of a family constitution, a document created by the family council and approved by the broader family at a family assembly.
