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Good governance helps family businesses

Family businesses are the backbone of our economy. They face their own set of problems and opportunities which are often exacerbated and amplified in the arena of a family. It can be hard to separate family and business life, leading to increased stress for everyone. The statistics are staggering. Only 30% of family businesses make it to the second generation, and only 12% to the third generation. Most family businesses don’t think too much about governance, but taking a leaf out of the book of larger companies which have been around for years and survived constant changes in personnel can help. In this blog, we highlight the benefits of good governance to a family business.

5 tools to help you improve your governance

Everyone reading this will be well aware of the fundamentals of governance – the need for boards to:

  • ensure compliance with the law, their constitution document, and regulation
  • provide clear, long-term vision, and ensure the strategy is taking us towards that vision
  • set the tone for culture and behaviours by defining values and ensuring they are lived throughout the organisation
  • oversee performance and ensure agreed targets are being met
  • agree the risk appetite for various aspects of the work, and ensure everyone is managing risk appropriately throughout the organisation

A well-governed organisation is a joy to be a part of, and getting governance right needn’t be expensive. There are a number of simple, low-cost governance tools that can really make a difference.  My top 5 are:

The quickest way to kill your reputation?

Conflicts of interest are regularly in the news. Just last week, Lady Butler-Sloss stepped down from leading the independent inquiry into the way public bodies handled child sex abuse claims after just seven days. As a former judge, with previous experience of dealing with abuse cases, Lady Butler-Sloss was the perfect person to lead the inquiry. However, when concerns were raised over family ties, Lady Butler-Sloss said she was “not the right person for the job”. Does this mean Lady Butler-Sloss would have done something untoward to protect her family? Absolutely not.

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