Family Business Constitution
A Family Constitution is a quasi-legal document, developed collaboratively by the family members.
It encapsulates the family’s shared purpose, vision, values, code of conduct and consists of key policies, rules and regulations for successful governance. It helps define the interaction between
Family Members, Family Owners, and Family Owner-Managers. It also chalks the roadmap to manage succession from one generation to another.
We help our clients develop and implement their Family Constitution which includes:
- Identify, develop and align their Family Business Purpose, Vision and Values
- Develop a Code of Conduct
- Articulate Ownership Framework
- Set up a family business governance framework
- Draft Family, Business and Ownership Policies
Identify, develop and align their Family Business Purpose, Vision and Values
- The core purpose of a Family Business is to establish the reason why the Family Members are in the Business together in the first place.
- Articulating an aligned Family and Business vision is critical to the success or failure of a Family Business.
- Family Values are the collective beliefs about what the Family stand for and takes pride in.
Develop a Code of Conduct
A major initiative family businesses can take to minimise misunderstanding, miscommunication, conflicts etc amongst family members is to lay down their expectations in writing. The process of discussing, writing and adopting a "family code of conduct" brings to surface the best intentions of family members and also spells out their minimum expectations in the form of a set of rules that the family can use when an issue arises. It is a set of do's and don'ts that the family members should follow in the areas of communication, information sharing, decision making and difference management to ensure a healthy relationship amongst family members.
Articulate Ownership Framework
Planning for effective ownership is fundamental to the long-term success of any family business.
We work with families to create appropriate ownership framework for current and future family owners by understanding their ownership intent, rights and responsibilities and suggest suitable ownership vehicles (such as Trusts and Wills), draft an exit policy, etc.
Set up a family business governance framework
The hallmark of a truly sustainable family enterprise is to establish an appropriate and effective governance that separates business from ownership and defines a clear process for families and owners to resolve family and business issues.
Setting up a robust governance framework aids in effective functioning of the Family business by setting up mechanisms for Decision Making, Performance Review, Difference Management and Conflict Resolution.
This involves setting up various Forums such as Family Councils, Family Business Councils, Family Ownership Councils, Advisory Boards, etc. to discuss Family, Business and Ownership matters, determine the roles and responsibilities of each Forum and appointment of Office-bearers and members of each Forum.
Draft Family, Business and Ownership Policies
Policies, when not explicit, can be interpreted by Family Members in their own way, thereby increasing the chances for misleading information, miscommunication, and misunderstanding.
However, drafting and documenting clear cut policies in advance after thorough discussion with all the Family Members, helps avoid such problems and conflicts.
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