Creating value through good governance:
How to balance what is right for the business and for the family
Choosing the right governance practices in a family business is a critical ingredient for its long-term sustainability. While business governance is essential for effective business processes and establishing control mechanisms, family governance processes and structures serve a different purpose. Not only do they help to support a strong communication environment among family members, they also define who the family is as a group and what they want to achieve.
The family governance value proposition
What is the value of good governance in the family business environment?
One of our goals in the STEP 2019 Global Family Business survey was to hear the answer to this question from family business leaders themselves. This is what they shared with us.
A strong family governance system might include a combination of mechanisms, such as family councils, assemblies and constitutions. Each one aims to provide clear guidance as to how decisions will be made by the family – for the family and for the business – and helps to create a unified voice both inside and outside the family. This framework contributes to the professionalization of the business as well as cohesion within the family itself.
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