What is Governance?
Pervin defines governance as the integration of systems, structures and processes that help balance the management of relationships and interactions between the accidental partnership, family business and business family.
As we know, governance in the family firm typically takes on an expansive role, as there are two constituents at a minimum to satisfy, the family and the firm. Indeed, personal goals and interests become increasingly disparate as the size of the family, ownership group and the firm continues to grow. These forces of separation are very natural and predictable, but destructive if left unattended.
Therefore, governance in the family firm is about the management of ownership relationships, and has two aspects: ground rules and governing aspects. Ground rules and policies help families in business together address accountability, trust, commitment, roles and communication patterns in order to exercise fair and consistent power or authority in modeling acceptable behaviour. Governing implies a foundation of mutual interests that keep the family and the firm in a straight course or smooth operation for the good of the individual and the whole.
Finally, in order to be interested in governance, the business family must perceive that they are a family business rather than a closely held or privately owned enterprise. They must also be committed to a shared future, where everyone has an appropriate voice that is heard and acknowledged.
The key question to start the governance process:
What are my intentions and what do I want to do?
First consider: Some Personal and Business Goals
It often helps to start the process by better understanding your personal and business goals. The next step is to explore how these can be achieved through the institution of an appropriate governance system.
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