The ABCs of Family Governance

In every family, certain patterns emerge over time, such as rituals, traditions, and expectations that quietly shape daily life and major decisions alike. Often, these are not written down but are rather implicit: whose opinion is sought during important decisions? How are responsibilities distributed? How are conflicts resolved? For many families, these unwritten rules work well while the family remains close-knit and its affairs relatively straightforward.

However, as families grow, diversify, and extend their reach across generations and geographies, these implicit frameworks are increasingly tested. Indeed, the world today presents new challenges for families, with globalisation, generations cohabiting and the diversification of the nuclear family. With these changes, the risk of misunderstandings or misaligned expectations rises, and explains why we are observing a rising demand for explicit, intentional governance. 

The purpose of family governance

Family governance is the process of establishing a structured approach to managing the evolving relationships, interests, and responsibilities within the family and its wealth and/or business. It provides a means to ensure continuity, unity, and clarity as families adapt to changing circumstances. Rather than relying on assumptions or tradition alone, family governance invites families to articulate their values, define roles, and set out clear mechanisms for decision-making and conflict resolution.

A useful way to understand the complexity of modern family life is through the lens of the Three Circle Model: Family, Ownership, and Business (or Wealth). Each circle represents a distinct set of concerns and responsibilities, whether nurturing relationships and legacy, safeguarding ownership interests, or managing operational matters. As families evolve, individuals may find themselves in overlapping roles, requiring careful coordination and mutual understanding. Mapping out where these interests align and where they diverge is an essential first step in designing a governance framework that is both fair and effective.

Setting up a governance framework

A governance framework is built by relying on three different types of tools: guiding principles, forums, and initiatives. The core of this framework often begins with guiding principles, and more specifically the family charter, a document that outlines the family’s shared values, long-term vision, and principles for decision-making. While not legally binding, the charter serves as a reference point for all family members, helping to guide behaviour and resolve disputes. It is complemented by forums such as family assemblies or councils, which provide structured opportunities for dialogue, planning, and education. On top of this, initiatives such as next-generation venture funds, a philanthropic foundation or a family museum are launched, which can help the family stay united and focus on their specific priorities and interests. 

Implementing such a framework is not without its challenges. The process requires openness, patience, and a willingness to engage in sometimes difficult conversations. It is natural for some family members to feel hesitant or wary, particularly when it comes to discussing sensitive topics or involving external advisors. Yet, it is precisely through these conversations that families can identify shared goals, address underlying issues, and build a stronger foundation for the future.

The role of a family governance advisor can be invaluable in this context. With an objective perspective and experience working with diverse families, an advisor can help facilitate dialogue, ensure all voices are heard, and guide the family towards practical solutions that reflect their unique circumstances and aspirations.