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  • Governance refers to systems which manage interaction among family members, management and the owners. Governance structures which manage interaction among owners include the board of directors and the shareholders’ meeting. Governance structures which manage interaction among family members include family meetings and the family council. Governance structures which manage interactions among management include executive team meetings and management meetings.

Governing overlapping systems

A family business can be understood as consisting of three overlapping systems: family, ownership, and business. Within each of these systems there must be structured communication and decision making, and there must also be effective communication between these systems.


Ineffective approachs to managing tension between the three systems

Without clear and structured approaches to governing these three systems, family businesses can resort to ineffective appraoches to managing the tension between the systems such as:
  • keeping secrets
  • exluding selected family members
  • using money or other power to maintain control.

Governance structures

Family businesses can use the follows structures to provide systematic governance in each system:
  • Shareholder meetings for the ownership system
  • Family council for the family system
  • Management meetings for the business system
  • Board of directors meetings for the overlap between the shareholders and management.



References



Further reading and external links



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Categories: Governance