October 2023
Technical Note
HBS Case Collection

Governance for the Family Enterprise

Format:Print
| Language:English
| Pages:10

Abstract

Governance stands as the backbone of any successful organization, providing the structure, transparency, and accountability necessary to guide decisions, ensure efficiency and foster sustainable growth. Its significance takes on a heightened dimension within family businesses, where the blending of family dynamics, business operations and shared assets makes the need for well-defined and accepted governance practices particularly essential. As the business scales in size and complexity, formalized governance is pushed down the road in favor of focusing on growth or out of a desire to avoid uncomfortable decisions. Unfortunately, the consequences of overlooking governance in family enterprises can lead to misaligned decisions, conflicts, and potential erosion of both the family’s and the business’s legacy. This note offers a number of tools families can consider when designing their governance frameworks. Not all of these tools are relevant for all families, but preserving family cohesion generally requires at least some of these governance structures.