There are three components to family governance:
- Periodic (typically annual) assemblies of the family; all families in business can benefit from this activity.
- Family council meetings for those families that benefit from a representative group of their members doing planning, creating policies, and strengthening business-family communication and bond.
- A family constitution—the family's policies and guiding vision and values that regulate members' relationship with the business. This written document can be short or long, detailed or simple, but every family in business benefits from this kind of statement.
The rare family in business may have a more elaborate family governance structure, with a separate meeting for family-owner-managers or a separate council for family shareholders or periodic meetings between shareholders, the board, and management. I prefer the simplest structure that does the job and the three components above are all most families in business need.
Properly composed and managed, a family assembly and family council help:
- Develop clarity on roles, rights, and responsibilities for family members.
- Encourage family members, family employees, and family owners to act responsibly toward the business and the family.
- Regulate appropriate family and owner inclusion in business discussions.
The family assembly typically meets annually, lasts one to two days, and includes all adult family members (yes, including in-laws). Families need to decide at what age children should attend these meetings. One family says that children should attend when they are able to feed themselves; most families start bringing the younger generation into meetings at around age 16. For the young children, families should still consider organizing some group activities where the children can begin to learn about the business and develop relationships with their siblings and cousins.
