The Code of Conduct is essential for every Family Business as it a tool to manage conflicts. It is a document that sets out guidelines for resolving and managing issues backed by the framework of Family Values.
Framing an appropriate Code of Conduct for the Family Business involves less work when compared to setting up a constitution as it focuses only on bringing discipline into the dealings of both family and business.
The Code has its own limitations as it only manages conflicts and cannot address issues such governance, succession etc., although it might resolve problems arising out of those too. However, the Code is very important as family businesses are especially vulnerable to conflicts in the three zones of Family Business – Family, Ownership and Business. It must be noted that family businesses can create unique kind of conflicts that is not found in other businesses as several generations may be involved in the business.
Since every business is unique so will be the code created for it. However there are some common areas that the code would address. These would include communication, professionalism and showing respect and support for each other’s personal and business needs. It could also cover meeting procedures, conflict management, conflicts of interest, teamwork and sharing of information openly and honestly.
A Family Council could put the code of conduct together, consulting all members of the family. The Council would first need to identify the core of shared beliefs that have shaped the Family Business. Being a living document,
it has to be reviewed at least once in two years as the business grows and family expands.