The “secret sauce” of family-ownership in business

The “secret sauce” of family-ownership in business

Effective governance empowers leaders of families in business to make the most of the unique strength of a family enterprise: the synergy between a strong, unified owning family and a well-run family enterprise or family office. Many families fail to govern the family – business relationship, to the detriment of their business and their wealth.

Related content

Business people having meeting in conference room

Solutions to the governance challenge have to be comprehensive, holistic, and systematic, not based on advice from a single discipline, like the law. Yet family business owners often use an individual accountant, family psychologist, or trusted lawyer for particular tasks or projects that relate building a governance structure.

Implicit in systems theory is the capacity jointly to optimize interrelated subsystems in such a way that larger system, in this case the family business, can be most effective and successful in the pursuit of its goals. Intuitively, reaching this state would seem akin to reaching nirvana, and it is just as difficult.

Yet thousands of family businesses have achieved precisely that. They have balance the goals and needs of families, individual family members, shareholders, and the business itself in what appears to be a masterful walk across a tightrope. They have done so by implementing simultaneously the strategies, structures, and systems for family and business.

Family enterprises can indeed inspire a commitment on the greater good across generations. But this takes leadership by the incumbent CEO and/or chairman on the seven recommendations listed; these are the action levers of family business governance:

  • Family forums or councils that promote transparency, responsible ownership, and continued family unity
  • Boards of directors that promote accountability, conflict resolution, and strategic growth
  • Realigned ownership structures that prune the family tree, ensure corporate control, and promote agility
  • Strong organizational cultures that preserve customer orientation, quality, productivity, and innovation
  • Family offices that capably manage the pooled financial resources of the family
  • Fair policies in a comprehensive family constitution or charter
  • Solid managerial practices – such as strategic planning for growth and the employment and retention of key nonfamily management

The current CEO, chairman, or president of a family enterprise or family office can hardly leave a finer legacy and contribution to family business continuity and continued family wealth across generations than the creation of an effective governance structure. The book “Governance in Family Enterprises” makes specific and relevant recommendations on how family members can build effective governance in their family enterprise.

Connect with us


Request for proposal



KPMG's new digital platform

KPMG's new digital platform