GovernanceGetting Serious About Governance
If you are a family business owner, governance is one of your fundamental responsibilities. It is vitally important to put processes and programs in place for managing the interests of both the family and business. Good governance will assure that you have the necessary systems for planning, decision-making and problem solving. Think of governance as the “rules of the road” booklet that you studied as a 15-year old in preparation for taking your driver’s license exam on your 16th birthday. You and your company need to develop these “rules of the road” for your family and business. You also need individuals that can support and advise you when difficult or important decisions need to be made.
In order to promote harmony within the family there needs to be proactive communication about all aspects of the business. A Family Council should be established and periodic meetings held to update family members on the state of the business and to seek their input. This open, structured, communication will lead to family member commitment and consensus. A lack of communication will foster a climate of bitterness and jealousy.
Family owned businesses would benefit greatly from the establishment and support of a Board of Directors. Boards not only give wise counsel but they also:
- Protect the company’s assets
- Monitor the performance of the company
- Come alongside the CEO and provide valuable feedback
- Provide input to the company’s strategic plan
- Provide mentoring to family employees regarding their careers
- Communicate with the family council
- Work with the CEO to create a succession plan
- Act as a link between shareholders and the management team
- Provide leadership for the company in case of disability or death of the CEO
A lot of thought needs to go into picking the best people to serve on a company’s board and it is highly advised to bring in outside directors rather than only family members. Outside directors have experience and skills that will prove invaluable to the family owned business.
Lohoff-Gaida Consulting will assist you to put the proper governance structure in place. We can facilitate family meetings, if necessary, and help you to find and recruit the best outside directors.