what to do. In that sense, the term“ governance” might be misleading and probably even needs to be replaced( though we’ ll keep it for now).
Family governance is best understood not as an end in itself but as a set of tools that help families preserve and strengthen what matters most. At its core, family governance is the continuous process of identifying, committing to, and living by agreed, family-wide values, policies, objectives, responsibilities, and legal structures in order to guide decision making.
Good governance means instilling the ideas of financial stewardship in succeeding generations by promoting responsibility, education, alignment, structure, and orderly succession in alignment with the family’ s values. With a sharper sense of values, families can also have a more positive impact on the outside world with their giving and legacy initiatives. When families nurture and safeguard their legacy this way, they can further strengthen their cohesiveness. Governance fosters the kind of communication that allows family members to avoid unnecessary conflict and promote long-term harmony. stance,“ What do we stand for as a family, and why do we stand for it?”
They can either do this themselves or get help from a third party, but if they want to succeed, the family members will need to agree unanimously on these questions, and if they don’ t, they’ ll have to narrow their scope until they do. Ultimately, the family should memorialize its decisions as part of its“ family constitution” or guiding principles.
Preparing A Family Constitution
Constitutions are not just for nations. They are powerful tools for families, too, and don’ t require a constitutional convention to be drafted. They instead require a family meeting to discuss an agenda, followed by a drafting session in which they put the ideas in writing, one that will involve family representatives or third-party facilitators. Multiple iterations may be
necessary as the family reviews each draft and finally comes together around its constitution.
Regardless of who drafts it, the family constitution should be designed to endure. It should be clear, specific and even fun for family members of all ages to read. Ideally, it would contain a bit of family history, storytelling and other helpful context so that future family members not only understand but feel meaningful bonds to their ancestors.
A family constitution should be written in a way that works best for the family adopting it, but there are key elements that should always be there:
1. The family’ s agreed mission, vision, purpose, and values;
2. A framework for policy decisions that
Understanding What The Family Stands For
Now think of a family as an organization and consider how organizations articulate clear missions, visions, purposes, and shared sets of values. The people within successful organizations commit to living by these values, even when it’ s difficult, not just because they have to but because they believe in those ideas.
If most successful organizations thrive in this manner, why wouldn’ t a family do the same?
For families embracing this idea of governance for the first time, the process begins with some education about it, followed by a family-wide commitment to the process. The family must then begin the work of agreeing on its foundation: a common mission, vision, purpose and set of values. They will need to ask and answer many difficult questions, for insays who leads, which decisions will require consideration by the family as a whole, and how the decisions will be made;
3. The various forms and cadence of meetings and other communications that will occur each year;
4. The roles and responsibilities assigned to each family member; and 5. A framework for conflict resolution. Like all constitutions, this one can be amended as necessary to reflect changes in the family and its circumstances. There should be clear procedures to ensure that these amendments are relatively uncommon and always well-considered.
The“ shirtsleeves” problem isn’ t just about future generations with no rudder squandering family wealth. It’ s also about the sad tendency of people to forget where they came from.
Communicating And Collaborating
The corporate world can again teach us good lessons here, since good companies ensure that regular, effective communication exists at all levels. They also ensure that all employees have clear roles and responsibilities. A family’ s governance applies similar concepts to its members.
There is no singular, correct formula for family meetings, roles, and responsibilities, but in robust governance models, three groups are common:
1. A family assembly: This group typically includes all family members, including those related by marriage. It meets annually to review the constitution; to discuss the family’ s progress in achieving its mission and vision; and to evaluate new plans, policies or other activities. The family assembly can use annual meetings to address any emerging or existing conflicts and hear and learn from experts and advisors. Involving children in these meetings is important once they’ ve reached the appropriate age.
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