The structures and methods that families employ to organise themselves and guide their relationship with their enterprise are referred to as "family governance." Family governance, when well-designed (and correctly implemented), can help define limits, provide clarity, and result in more peace among family members, a more focused business, and smoother generational transfers. Family governance, on the other hand, must reflect the culture, dynamics, and goals of the family in issue in order to be effective.
The merging of family and business issues creates governance challenges for families in company. Emotional ties are often related with family enterprises. Family companies are influenced by psychological ownership, love, hatred, attachments to the past, promises made, and future aspirations. Many issues, such as family member employment, successor selection and process, retirement, length of tenure, family share ownership, inheritance and trading of shares, and next generation education and development, are covered by governance structures that aim to separate family issues from business decisions.