It’s hard to get a handle on “governance” sometimes, and depending on the context, its meaning and connotations can vary greatly.
In some contexts, it’s a pain in the backside. In others, you can’t live without it.
Put me in the “can’t live without it” camp when it comes to family business continuity and family legacy.
Governance in those situations can be tricky, but you really need it, and this post will shed light on that perspective.
Institute for Family Governance
This week I was in New York for the first annual “Institute for Family Governance” conference. The IFG is in its infancy, and came into existence at the crossroads of STEP (Society for Trust and Estate Professionals) and FFI (Family Firm Institute).
Babetta von Albertini, of Withers Consulting Group in NY, the Program chair, is a member of both FFI and STEP, and I first met her at the FFI annual conference in London in 2015.
She is the driving force behind IFG and must be congratulated for pulling off a great kickoff event.
She also announced that the 2nd annual IFG conference will take place on January 25, 2018, and that none other than the legendary Peter Leach of Deloitte UK will be a featured speaker.
What the Heck is “Family Governance”?
“What is Family Governance?” could be the proverbial $64,000 question. But it’s more like the $64,000,000 question, because sometimes size does matter
If your family net worth is in the range of $64,000, please skip the rest of the questions, thanks for your time completing our survey.
If, however, your family net worth is in the $64,000,000 range, perhaps this topic is one you need to be paying attention to.
Okay, let me rephrase that.
If you care what happens to your wealth over the next generation or two (or more), then good governance will be important. If you don’t really care what happens after you die, don’t bother reading past this point.
What Happened to “Governance, Ugh!”?
For longtime readers and fans of my work (Hi Mom!) you may be confused by the title of this blog, which seems to suggest, via the “Aaaah” after “Family Governance” that it’s something good, and which brings relief.
You may be thinking “Hey Steve, how does this square with Chapter 8 of your book, SHIFT your Family Business, which I clearly recall was titled “Governance, Ugh!”?
My answers to this are many, including:
- Thanks for noticing
- Yes, it IS available on Amazon
The Evolution of Governance
Back in 2013 when I wrote the book and called that key chapter “Governance, Ugh”, I did so based on my perception that the word actually conveyed that “Ugh” reaction to a large number of people.
I like to believe that the world of Family Business and Family Wealth has evolved somewhat since I wrote it, and based on what I heard in NYC this week, it has.
Even if the “world” has not yet evolved, though, I know that I have. Let me elaborate. I have always known that good governance is essential to creating a sustainable legacy for a family.
I used to be afraid to tell people that they needed “governance”, but shying away from the word made it seem “unspeakable”, which may have conveyed that it was also undesirable..
My Own Evolution
When the Institute for Family Governance, came to life, and when I realized that I was excited to discover it, that told me that I have evolved, as has my thinking and my desire to call it what it is.
Yes, we can continue to refer to it as “decision-making”, and “communication” and “structures and processes”, and “how we are all going to get along together” and “formalized rules and regulations”.
At the end of the day, for me, the best word to encapsulate all of these is GOVERNANCE.
The Real $64 Million Question
The real question is WHY is it required.
My short answer is:
Because your Wealth and Legacy won’t Preserve Themselves.
Family governance is a must, and it must be custom-developed by your family, for your family.
But it is definitely OK to get help with this. It is even highly recommended to do so.
To Be Continued
Watch this space for an upcoming blog:
5 Things you Need to Know: Family Governance.
Coming in February 2017