There can be little doubt that the larger the family, and the more generations it has been active in business, the greater the need for formal governance procedures to be in place. The evidence from our survey shows governance does tend to be a greater priority for large family businesses, but smaller businesses also recognise the advantages good governance can bring.
Those who were first or second generation, who maintained a patriarchal or matriarchal role or where the family itself was very limited in number, were far less likely to have implemented a constitution.
For many family businesses, a sense of shared purpose can be more important than anything else. Without a defining purpose that can be assented to by all those involved, the family enterprise can seem fruitless. As one respondent to this year’s Family Business Survey put it, “why not just dissolve the assets, share out the proceeds and be done with it”? Some families have followed this path, with those on the periphery receiving their share, leaving a reduced number of family members forming a more concentrated core. Many may remain keen to sustain the family purpose and name in their own manner, with new plans and ventures.
How might a family create this sense of shared purpose? Our experience of advising business owning families demonstrates repeatedly that the active pursuit of effective governance is a necessary starting point.
Findings and insights
The importance of governance
Who needs governance and why? And when a family decides it needs to implement a little more rigour, how do they go about doing so?
Can the right governance bring a sense of common purpose?
Without a family mission statement and sense of shared purpose, families often fragment.
Governance and getting the next generation involved?
Where families do not want the next generation to work in the business (aside from school/ university holiday placements), those people grow up to develop their own careers as, for example, bankers, doctors, architects etc.
Can a family become a brand in its own right?
We consider whether a family, together with its history (potentially including that before it was ‘in business’) and values, can become a brand in its own right.
Family Business Survey 2019/2020
Engaging the next generation for business-owning families has always been necessary; now it has the added context of increasing human longevity. Our survey aims to reveal a range of insights into the challenges faced by families in their intra-generational planning.
Family Business Survey 2017/2018
In our 2017/18 survey we revealed that while governance and structure remain key tests, the current generation of business owners is facing more varied challenges than their forebears as globalisation, technology and longevity impact day-to-day business life.