Can the right governance bring a sense of common purpose?

Without a family mission statement and sense of shared purpose, families often fragment. Several of our families had been through fragmentation in terms of business involvement, with some making liquidity available to buying out certain family members.

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Findings from our survey showed a very high percentage of those with constitutions (89%) felt their families were either ‘mostly’ or ‘entirely’ positive about them, with the balance of respondents being neither positive nor negative. This represents a strong endorsement for constitutions in general and suggests they are a useful first step for families where no other formal governance structures are in place.

Our survey respondents felt particularly strongly that regular family meetings were an imperative, although meetings alone were not enough to provide the glue to keep a family united and moving in one direction. Some family members gave examples of where those at the centre of the business or investments had bought out those who were no longer interested or engaged. For the most part, however, the goal was to maintain a sense of the family acting in unison.

“We have a family committee that operates in parallel to the business, worrying about family issues, while the board worries about company issues. Our brand is different. Our family members don’t necessarily have [financial] resources but they are part of something bigger.”

Where the importance of family meetings was accepted to be high, there was a corresponding likelihood for family members to be required to sign the constitution and there to be a family council. These families tended to view their governance as being largely ‘fit for purpose’, Responses emphasised the necessity for flexibility in written governance documents and of it being in such a form that younger family members were genuinely keen to become involved in the resultant governance activity. This potential ‘buy-in’ was a necessary precursor to developing a positive and beneficial sense of themselves as having a family brand, including where a literal business brand had been sold. These themes came across as a persuasive argument for putting such governance structures in place.

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Rupert Phelps

Partner, Family Wealth Group

Family Wealth Group
London

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