How family enterprises can use governance and flexibility
These keys to longevity safeguard succession and permit graceful exits.
Family businesses around the world are looking to safeguard their long-term sustainability. The family enterprises that have been successful throughout multiple generations employ both governance and flexibility. This means having a formal governance structure in place to help members communicate effectively and establish transparency, whether through written rules, family councils or assemblies. Flexibility in the family enterprise includes allowing family members to exit the family business. This not only allows them to pursue other career opportunities that can provide valuable work experience, but it also helps to build trust and actually increases loyalty.
A commitment to formal meetings and documentation is essential for a strong family enterprise. “When it comes to governance, many families make the mistake of managing their business in an informal manner,” says Professor Roger King, Founding Director of the HKUST Tanoto Center for Asian Family Business and Entrepreneurship Studies. “Family members can only be held accountable when there are clear, written rules and contracts in place.”