The system of rules, practices, structures, documents, and standards in a family enterprise, that guide the decision-making of each entity in the system.
Governance translates essentially to decision-making and management of a system. Family enterprises have multiple elements that require good decision-making in each part. How families approach and maintain their decision-making throughout the enterprise is a major determinant of its long-term success.
Family enterprise governance may be understood along two major lines:
Family governance – those structures, documents, and procedures that support decision-making and management of the family side, such as family councils and family constitutions.
Enterprise governance – those structures, documents, and procedures that support decision-making and management of: a) operating companies and business assets such as owners/shareholders, boards of directors, and corporate management, and b) non-operating-company entities such as family offices, foundations, and trusts or private trust companies.
Efficient and effective collaboration among the various parts of governance enhance the effectiveness of the entire family enterprise.
See Also: Family governance, Enterprise governance
See References
Baron, Josh, Rob Lachenauer, and Sebastian Ehrensberger. “Making Better Decisions in Your Family Business.” Harvard Business Review, September 8, 2015. https://uhnwinstitutelibrary.org/document/making-better-decisions-in-your-family-business/
Jaffe, Dennis, and James Grubman. “The Two Pillars of Governance in Family Enterprises: A Straightforward Understanding of Complex Systems.” The FFI Practitioner, 2020. https://uhnwinstitutelibrary.org/document/the-two-pillars-of-governance-in-family-enterprises-a-straightforward-understanding-of-complex-systems/
Hauser, Barbara. “Family Governance–Who, What, and How.” The Journal of Wealth Management, Fall (2002): 10-16. https://uhnwinstitutelibrary.org/document/family-governance-who-what-and-how/