SUCCESSFUL FAMILIES WILL BECOME A LEGACY IF THEY ...
1. Provide a family strategic plan
Each family requires its own family plan which is supported by the business plan. The components of the strategic plan as defined in the Vision Leadership Model©, are:
- The vision of the family
- Mission statements, incorporating the business, development of the individual family members, philanthropic investment and the brand positioning of the family
- Long, medium and short term goals
- Values of the family
- The guiding principles applicable to the future generations
- A family governance framework, including a family constitution etc. The composition of current and potential future investments, including the family business, needs to be taken into account for the purpose of establishing the family plan.
2. Ensure inclusive decisions
A long-term risk that the family faces is that a single person holds all the reins in the family business. The risk is that in the event of the death or incapacitation of such a person, the family members may not be able to take responsibility for the business. Various family members usually carry diﬀerent roles and responsibilities.
The vision statement of the family will provide a constant guiding light for future generations on the direction to be followed. The vision statement on its own cannot provide procedures for decision- making, even though it ensures clarity in terms of purpose. Family governance structures provide the necessary framework to ensure that family members participate in decisions and thereby ensure longevity.
3. Adopt and endorse a family constitution
The family governance framework is embodied in the family constitution. The constitution is usually not overly complex but identifies, defines and regulates the family governance framework. The constitution will specify in broad terms the scope of the family’s decision-making, ensuring this does not override or conflict with other important governance mechanisms the family may have in place. The alignment with trust deeds, company constitutions and foundation rules needs to be managed. Policies and committees will be established to support the family constitution and the family’s strategic plan.
4. Implement a family governance framework
Governance refers to policies and procedures agreed upon by all members of the family. The family governance framework sets out the ‘how, what, who and when’ for the family to govern itself and make decisions. Family governance may include:
- The family council
- The family assembly
- A description of how the council and/or assembly will function
- How many family members will constitute the council and where will they be drawn from
- Minimum age or requirements to be a council member
- Frequency of meetings
- Whether members of the council must be bloodline, the removal or replacement of family members that are not exercising their responsibilities appropriately and in the best interest of the family etc. Governance structures endure across time and situations, whereas individuals do not.
5. Ensure the involvement of family members from a young age
Family assemblies and, where practical, council meetings should include younger generations. The family can include multiple generations in committees, philanthropy or focus groups. The active education of the whole family will significantly contribute to the success of the family’s fortunes for generations to come.
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Successful Families that have become a legacy have:
1. A family strategic plan
2. Inclusive decisions processes
3. A family constitution
4. A family governance framework
5. Participating family members from a young age
"Governance in a family business can be thought of in terms of:
- Structure for example, deciding to create a family learning and development committee;
- Process for example, creating and running on going ownership education programs and the annual preparation of a personal development plan; and
- Policies for example, as aspect of the Family Employment Policy could be that family member employees are expected to participate in the family learning and development programs."
Christian Steward; Ten Key Insights into the process of making your own Family Constitution. www.familylegacyasia.com