WHAT IS FAMILY BUSINESS GOVERNANCE?
Two things are sure: First, maintaining order in the family is difficult, and second, running a successful business requires considerable effort and self -discipline. Those two categories come together in family-owned companies and force family members to make decisions regularly: Do we put family unity before business interests? Can we make business decisions despite possible family conflicts? Creating a balance between family harmony and business challenges requires constant communication and awareness. However, family governance in business management requires much attention, and business owners are very focused on day-to-day operations. In such a difficult situation, a comfortable family sitting at the kitchen table can negotiate informally and easily and always face challenges in the family and business. Often the first and second generations live their lives close to each other and have many similar ideas. However, once the in-laws are added to the family vision and the third generation grows up in different homes, perhaps with slightly different standards, it becomes increasingly difficult to reach a simple agreement on family and business matters.
In addition, the increase in the number of family members, the number of family branches and generations, the diversity of space, the growth, and the increase in business complexity challenge the “kitchen table model” of communication and decision-making. So how can family unity be maintained in a way that positively impacts the business and leads to more effective decision-making processes? One way to address the challenge of smooth family governance is to set down rules that govern how family members who are part of the family business communicate with each other and their business to maximize the benefits of family harmony and business growth.