5 Things you Need to Know: Family Governance

5 Things you Need to Know: Family Governance

A few weeks ago, at the end of “Family Governance, Aaaah!” I promised to follow up with more on the subject, in my “5 Things” format. I said it would be out in February, and this being my final blog of the month, that means now.

 

5 Things you Need to Know: Family Governance

 

  1. 1. You already have some “governance” (even if you don’t know it)

Every family actually already has some form of governance, even without realizing it. Most is unspoken, informal, poorly developed, and not as effective as it could be.

It is usually invisible, until you decide to work on it, and write it down.

Here are three ways I like to gauge governance, each on its own continuum:

  • Development
  • Effectiveness
  • Fairness

(Hmm, looks like a future blog post right there…)

 

  1. More isn’t always better

Sometimes when we learn that we are deficient in an area of our lives, and we discover that there is something “new” that we need to add, we have a tendency to overdo it.

I always advise people that having better governance should be a higher priority that just having more. So, what is “better”? See No. 1 above; i.e. more developed, more effective, more fair, to start.

Another reaction when learning of a deficiency can be to act quickly to remedy the situation. But again, quick fixes in governance are rarely the way to go.

 

  1. Every family is unique, so is their governance

Family council, family assembly, family constitution, family charter, family compact… All are different names for various potential parts of a family governance system. No two families are identical, and so their governance shouldn’t be either.

Each family has different needs, exists in different stages and phases of life, and has a different set of priorities and values that it wishes to sustain.

“Oh, the Johnsons look like they have done a good job, let’s just copy them”.

Yeah, well, that might work for a landscaping job in the neighbourhood (but probably not even there) or for booking a cruise vacation, but NOT for your governance.

 

  1. You can’t buy it

Family governance is slowly but surely becoming a subject that is gaining traction, and that’s a good thing. Along with that traction, unfortunately, come many people attempting to capitalize on that popularity, without necessarily appreciating the many nuances that come with applying governance in general to governance in a family.

If a hot-shot consultant offers to “sell” you some “governance”, as a product, as if you can buy it off a shelf, you should ask yourself many questions about how useful it’s actually going to be.

Effective governance is NOT a product, and you CANNOT buy it.

You need to develop your family governance, “by the family, for the family”.

It takes time to do this, and you will have great difficulty doing it all by yourselves, without outside expertise. But the experts who help you do it should understand all of this, if not, keep looking.

 

  1. Governance is the main secret to legacy 

Here are a couple of tag lines that I’ve used over the years, let’s see how we can relate them to family governance.

“Helping families create the harmony they need, to support the legacy they want.”

and,

“Because your wealth and legacy won’t preserve themselves”

Without realizing, because I harboured somewhat of a “bias” against the word governance itself, I was actually talking exactly about family governance.

The “harmony they need” comes from well-developed and fair governance, and that has always been the key to sustaining a legacy into following generations.

And just how do you preserve wealth and legacy, if not by developing proper, sustainable family governance systems?

If you know of any families who are exceptions, please tell me about them. I defy you to find a multi-generational family that has successfully passed down wealth and a legacy WITHOUT some form of effective family governance.

 

Clarifying Note

If you’re still not sure what I am getting at, this should help:

Chances are that one family member made all the important decisions for a while, but it’s pretty certain they won’t live forever. (See the image I chose to accompany this post)

How are decisions going to be made when they are gone?

If you just said “aaah!” feel free to read the blog again.

 

Previous posts in the 5 Things format:

 

5 Things you Need to Know: Sibling Rivalry

 

5 Things you Need to Know: Family Inheritance