Are Family Firms Becoming More Innovative With Their Governance?
In family businesses the interplay between traditional values, succession planning, family dynamics, roles and responsibilities and recognition of the need for both governance of the family and the business is not easy.
Balancing the needs of the family and the business can become more complex as a family grows, a business becomes bigger and multi-generational and the world continues to change at such a fast pace. Governance practices and frameworks need to continually evolve to meet the needs of modern day family firms.
We asked our Global Family Business Think Tank Panel if they thought that family firms are becoming more innovative when it comes to their governance.
The Results:
Are Family Firms Becoming More Innovative With Their Governance?
Yes - 44%
No - 33%
Don't Know - 22%
Our panel recognises that governance is important for all families in business but despite all the changes going on in the world, it is not fully apparent that governance is evolving and becoming ore innovative. Whilst there are those that are seeing innovation, there are others who are seeing little change in the way that family firms are governed which could present issues going forward.
THE THOUGHTS OF OUR ‘THINK TANK’ REPRESENTATIVES:
“Many family businesses still need to implement more robust governance structures for both the family and the business, create formal conflict resolution processes, and add in external voices to help fill in gaps of knowledge. The stats are clear as a large percentage of family businesses fail as they move down the succession line, not for any singular reason, but family conflict is certainly high on the risk of causes.”
Jeremy Stevenson
Managing Partner, iBridge Global Partners
“I like the idea that governance is about learning, it’s about learning to collaborate together, to listen to each other and giving everyone a voice before making a decision. I worry that too many Asian families are still not doing even the basics of family or family enterprise governance.”
Christian Stewart
Independent Family Advisor, Family Legacy Asia
“Individual families try new-to-them approaches, but those approaches have usually already been tried elsewhere. The trick is finding sources of support who can take an overview of the sector and share different approaches so that individual families can find robust routes forward.”
Claire Seaman
Emeritus Professor of Family Business, Queen Margaret University
“Boards today focus more on strategy, growth, organisational development and aligning shareholder objectives than in the old days of financial statement review and compensation. Boards need to be forward looking to navigate the multitude of challenges facing businesses today.”
George A Isaac
Founder & Managing Partner, GAI Capital Ltd.
“Most family firms are not aware of the benefit of good governance. Innovation is only observable in family firms who have been investing in family and business governance for a long time – and those are in the minority.”
Susanne Bransgrove
Founder and Lead Family Expert, LiquidGold Consultants
“Family firms have more awareness on the importance of governance for their survival. They are open to finding the appropriate solutions that work for them. They network with other family businesses to listen and learn from stories of successes and failures and try to adapt what is most effective for their family business."
"Through closed networks, family businesses are becoming more comfortable opening up and sharing their stories and family businesses have the flexibility in being more agile in responding to the challenges and crises they face by adapting their governance rules in the interest of the survival of the family business.”
Lina Chehab Shareholder & Chief Governance Officer, Chehab Brothers SAL
Find out more:
These results were part of the 2024 Global Family Business Think Tank Report that was published in Spring 2024. Check out the full findings in the report here
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