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Sound Governance - It's Not a Choice; It's Essential

Governance in a public company is challenging enough.When Governance is working within your family business, family members and all people working in your business are clear about...

1 April, 2022
Governance, Article
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Governance in a public company is challenging enough. What happens in your family business when your Leadership and Management Team, Family Council, Advisory Council or Board of Directors has family members from different generations – parents, sisters, brothers, and cousins? It’s complex because, in most instances, your family owns and plays an active role in your business's leadership and day-to-day operations, which is why sound Governance and directors who are clear on their role and accountabilities are needed.

When Governance is working within your family business, family members and all people working in your business are clear about: the vision and values, accept and work within sensible policies and processes that guide behaviour, what is to occur in particular circumstances and situations, and understand and accept what the family expects from the business. Sound Governance provides you with the opportunity to bring the right people together at the right time to work on those things that are important to your business.

While we have some great examples among FBA members of sound Governance and effective directors in family businesses, we disappointingly find more examples of a lack of sound Governance and directors who are unclear or not carrying out their duties responsibly.


Some of the common challenges we come across in family businesses;

  • The family’s vision and the values that guide behaviour are not defined or are unclear. What would happen if you asked the family members involved in your business to write their vision of where your family business will be three years from now, would there be common agreement?
  • In many instances, the family does not have a Family Constitution or Charter, and if they do, it is often out of date. When was the last time you sat down with your family members and considered your family’s Charter?
  • How to form Family Councils, structure Advisory Councils and Boards is unclear.
  • A belief that a family’s business must get to a specific size before they need to worry too much about Governance – size doesn’t matter.
  • If policies and guidelines exist that govern how the family and the business operate together, lip service is paid to them or ignored for various reasons.
  • Often family members are appointed into directorship roles for the wrong reasons. Some examples include; it’s considered a birthright, no other family member wanted the role, expediency to achieve another outcome, or desire the title of director.
  • Further family members who are directors are often unaware of their duties and risks associated with taking on these vital roles.

    Sound Governance does not eliminate tensions in family businesses; however, those family businesses that have the Governance in place appropriate to their circumstances find it easier to navigate the challenges to reach workable solutions while keeping family and organisational harmony intact.

    The Family Business Governance and Directorship Online Course is designed to provide you with the knowledge and tools to take the necessary steps towards ensuring you have sound Governance in your family business and those directors understand their roles and responsibilities.

Written by Peter Ivett

Peter Ivett | Vivente Australia

Peter Ivett is a an FBA Forum Group facilitator and holds advisory and board positions in several family companies and is himself a family business owner.

Peter brings 35 years’ experience in sales, marketing and advertising, and organisational development to the table. Peter specialises in facilitation of family forums and succession planning, business and leadership coaching and defining and shaping company culture.


The views expressed in this content are those of the author, who is also responsible for any errors and omissions. Family Business Australia and New Zealand provides this article for your information only. The content of the article should not be taken as advice. If you wish to explore this topic, please consult an advisor who you consider to have the expertise to provide specific advice in relation to your family business.