Key moments: Family governance | Deloitte United States

One of the first steps family businesses can take is to recognize significant issues that could affect the family and the business over time. As families grow, so does the complexity, as businesses can now support ever larger stakeholder groups. They will have to deal with the various perspectives that exist within a family system. As new generations emerge, business leaders must ensure that the appropriate legal and organizational structures are in place, such as wills, trusts and estate plans, to achieve their goals.

Additionally, as organizations diversify into new businesses, geographies, and products, they may find themselves at a disadvantage if their governing bodies lack the discipline to adapt to these transitions. Governance helps family heads anticipate and respond to challenges by bringing more discipline, transparency, and accountability to the issues that matter most.

As a next step, it is useful to decide what should be on the governance agenda. To be clear, the purpose of family business governance is not to create administrative burdens and bureaucracy, but rather to contribute to and oversee the strategic direction of the business, protect family relationships and preserve an entrepreneurial legacy for future generations.

Agenda items may include expertise and advice in functional areas such as mergers and acquisitions, marketing, international business or technology. Some companies can benefit from improvements in internal communication, while others can put in place more sophisticated processes to move from compliance to smarter governance, helping to ensure a more sustainable business.

Helen D. Jessen