Fundamental to the success of generational families is a common sense of purpose and shared values, which are adopted by successive generations to preserve the family legacy. Family values build a foundation for family unity and play a key role in managing expectations and setting out the principles that guide family members in how they interact with each other, both inside and outside of the family business.
Leading families have a supporting governance framework including a family charter to define a common purpose and shared values to support family unity and preserve the family legacy.
What EY can do for you
Research shows that one of the key reasons why most family businesses do not survive beyond the third generation is a lack of purpose. For many families, that sense of purpose, often referred to as the “glue” that binds the family together, is provided by the family business. The business is fundamental to the family’s identify and each generation has grown up being part of this legacy.
One of the challenges for families is that as they grow in size and complexity, an increasing number of family members are not directly connected to the business. As a result, it can be difficult to keep successive generations engaged. This becomes even more of a challenge if the family decides to sell the business and must redefine its purpose to take this change in circumstances and new context into account. In this situation, families may look to engage more with community and philanthropy, establish a family office or build a new family enterprise.
EY works with 75% of the world’s top family businesses and is well placed to help families define their values and purpose to preserve cohesion through successive generations. We provide a range of services from working with the family to document its legacy and prepare a family charter through to helping the family develop an appropriate governance framework.
Working with families to help define and document their vision, purpose and values is critical to creating a cohesive family group across the generations.
Strategic planning that is built around the family’s purpose and takes into account context is essential to helping family businesses deal with their challenges and achieve sustained success.
For many families, philanthropy and impact investing underpin their purpose and values and play a vital role in keeping successive generations engaged.
Corporate and social responsibility is often a cornerstone of family business and is reflected in their commitment to employees and community, as well as shaping the family’s values, culture and legacy.
A strong governance framework is essential for multi-generational success. It needs to encompass the three areas of family, business and wealth and how these areas interact with each other.
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