Family Business Blog
Family Charter - A Means to an End, Not an End in Itself
Much has been written about the importance of a developing a Family Charter or Constitution. It is indeed a powerful document that serves the purpose of setting out the rules of the game, how the family and the business interact.
Unfortunately many see it is an end in itself. The thinking seems to be that 'if we develop a Family Charter then all our problems will be resolved.' Sadly however, there are many examples of family businesses who have found that, when they most needed it most, their Family Charter was of little assistance.
This often occurs when either the document was unilaterally drafted by one member of the family (it's the fastest way to tick the box that says 'Develop a Family Charter'), or when it's prepared and then locked away in a bottom drawer.
I believe that having a Family Charter in place is just the 'ticket of entry' to the family business game. It is just the starting point for good family governance.
We use the graphic below to outline the process we use to help clients develop their Family Charter.
Unfortunately many see it is an end in itself. The thinking seems to be that 'if we develop a Family Charter then all our problems will be resolved.' Sadly however, there are many examples of family businesses who have found that, when they most needed it most, their Family Charter was of little assistance.
This often occurs when either the document was unilaterally drafted by one member of the family (it's the fastest way to tick the box that says 'Develop a Family Charter'), or when it's prepared and then locked away in a bottom drawer.
I believe that having a Family Charter in place is just the 'ticket of entry' to the family business game. It is just the starting point for good family governance.
We use the graphic below to outline the process we use to help clients develop their Family Charter.
The foundation of the charter is the family's vision and values. It goes without saying that sound governance structures are also a pre-requisite. With these in place the family can then address the significant issues related to the overlap between the family and the business.
However, as with most important things in life, the process of developing it is more important than the document itself. The power of the process is in building communication, problem solving, conflict management, decision making and other skills that the family develops during the course of developing the Charter.
The reality is that no family will ever identify all the potential issues that might arise in the future. The real skill that the family develops is the ability to work together constructively to address whatever it might have to confront.
That is why the two pillars depicted in the diagram are so important.
Imbue - definition - inspire or influence thoroughly; pervade, to permeate or saturate.
A Family Charter is only truly effective if it is imbued into the hearts and minds of all members of the family. It needs to take on a life of its own, as the values that it espouses become part of the families DNA.
RenewAs a living document it will require updating as circumstances change and new issues need to be dealt with as the family business evolves. This provides as opportunity for ongoing training in problem solving and decision making skills.
We believe that though the Family Charter serves an important purpose by documenting agreements made by the family, it's real power is the opportunity it offers to develop enduring skills that help the family address anything that might confront it in the future. The process of ongoing rewal and education are fundamental to ensuring that the document serves it's true purpose.
However, as with most important things in life, the process of developing it is more important than the document itself. The power of the process is in building communication, problem solving, conflict management, decision making and other skills that the family develops during the course of developing the Charter.
The reality is that no family will ever identify all the potential issues that might arise in the future. The real skill that the family develops is the ability to work together constructively to address whatever it might have to confront.
That is why the two pillars depicted in the diagram are so important.
Imbue - definition - inspire or influence thoroughly; pervade, to permeate or saturate.
A Family Charter is only truly effective if it is imbued into the hearts and minds of all members of the family. It needs to take on a life of its own, as the values that it espouses become part of the families DNA.
RenewAs a living document it will require updating as circumstances change and new issues need to be dealt with as the family business evolves. This provides as opportunity for ongoing training in problem solving and decision making skills.
We believe that though the Family Charter serves an important purpose by documenting agreements made by the family, it's real power is the opportunity it offers to develop enduring skills that help the family address anything that might confront it in the future. The process of ongoing rewal and education are fundamental to ensuring that the document serves it's true purpose.
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