Family, Family Business and Management of Family Business

By Michael Chahine

How the family business intersects with the family members, ownership and the senior management. A governance structure that interlocks the three circles of Family Governance.

Family business corporate governance, and management can be visualized as a Venn diagram or three overlapping circles, each representing a critical component of effective governance in a family business context. Here’s a description of each circle and how they interconnect:

1. Family Governance:

- This circle focuses on the family's values, mission, and vision. It encompasses the family'srules, objectives, and the dynamics of family relationships.

- Key elements include family meetings, succession planning, and conflict resolutionmechanisms.

- The aim is to ensure that the family's interests and legacy are preserved and promoted in thebusiness.

2. Family Business Corporate Governance:

- This circle pertains to the formal structures and processes that guide the family's businessdecisions. It includes the board of directors, advisory boards, and governance policies.

- This governance ensures accountability, transparency, and alignment with both family values and business goals.

- It also addresses issues like ownership structure, shareholder agreements, and strategicplanning.

3. Management:

- This circle represents the operational aspect of the business. It includes day-to-day

management practices, performance metrics, and leadership structures.

- Effective management ensures that the business runs smoothly while adhering to the governance frameworks established by both the family and corporate governance.

- It involves implementing strategies that align with both family objectives and corporate goals.

Interconnections:

Family Governance and Family Business Corporate Governance:

- The family's values and vision influence the corporate governance framework, ensuring thatthe business operates in a manner consistent with the family's principles.- Family members often hold key positions in corporate governance, which helps in bridging family interests with business strategy.

Family Business Corporate Governance and Management:

- Corporate governance sets the policies that management must follow. It establishes

guidelines for decision-making and accountability.

- Management, in turn, provides feedback to the governance bodies on operational challenges and performance, ensuring that strategic objectives are met.

Management and Family Governance:

- Management needs to be aware of family dynamics and governance policies to effectivelylead the organization while considering the impact of their decisions on family relationships.

- Family governance can influence management practices, especially in areas such as employee relations, culture, and stakeholder engagement.

Conclusion:

This interlocking governance structure fosters a holistic approach to managing a family business, balancing the unique needs and values of the family with the requirements of effective business operation and governance. By integrating these three components, family businesses can enhance their sustainability, adaptability, and long-term success.