Family governance
Family governance is the set of structures, agreements and practices a business-owning family uses to make decisions together, communicate, manage conflict and keep family matters separate from running the company.
Every business-owning family has some form of governance, even if it is only the founder’s word. Family governance, in the formal sense, means the family decides deliberately how it will organise itself as owners. It sits alongside corporate governance, which is about how the company itself is run.
It usually includes:
- Bodies: a family assembly for the whole family and a family council that does the ongoing work.
- Documents: a family constitution or charter, and policies such as the family employment policy and a dividend policy.
- Practices: regular family meetings, education for the next generation, and agreed ways to raise and resolve disagreement.
Families usually build these in stages, adding structure as the family grows and more members become owners without working in the business. Many work with a family business consultant to design them.
Family governance or corporate governance?
Corporate governance covers the board of directors, management and the company’s legal obligations. Family governance covers the family’s relationship with the company as owners. The two meet at the boardroom door, and keeping them distinct is one of the main purposes of family governance. Bringing family disputes into the boardroom, or business decisions to the dinner table, is the usual sign they have blurred.
Why it matters for the successor
Good family governance gives the successor a clear mandate. When the family has agreed how decisions are made and who makes them, the successor can lead the company without re-negotiating their authority at every family gathering. Governance sets the structure, though. It does not make the successor ready to lead the rooms within it. Family business consultant vs successor coach explains how the two kinds of work differ.