Family business readings: Living the charter is not easy
Prasad KUmar August 5, 2018
It is relevant to clarify what Family Charter means before we explore aspects of living it.
A Family Charter is a set of agreed principles and protocols for governance of a family business. It evolves through a participative and systematic process of open discussions amongst family members and owners. It enables an integration of the three dimensions of family, business and ownership. The involvement of an experienced and skilled family business advisor facilitates discussion of difficult subjects.
Progressive and far-sighted family firms usually agree on creating the charter. This symbolises their commitment to governance and cohesion. The journey is always intense and sometimes painful. It involves participation of all key family members in difficult conversations, over several meetings.
After having signed this document, most families think the job is done. There is an implicit assumption that the clarity and synergy achieved during the process, will last forever. Far from it, it's just the beginning.
Living the charter can be difficult. The family has to walk the talk.
As everyday life unfolds, some challenge or the other confronts the family and the implementation of the charter gets difficult:
So, how do we make all this effort worthwhile? How do we live it?
Firm, fair, empathetic and committed family leadership is essential to mobilise implementation. Here are some governance guidelines that support strong leadership. Providing for some of these in the charter is important:
Underpinning each family charter are values and principles that define the family. Building psychological resilience and maturity in family members, helps live these values. The two big reasons for problems are "entitlement" and "ego". Usually, the more successful the family gets, more hubris sets in. Feelings of comparison and discrimination overtake family harmony. Forgiveness and grace plummets, and the dry haystack is ready to spark conflict.
Increased self-awareness, higher consciousness and building "inner excellence" is paramount. This helps keep the ego in check and fosters humility.
The vitality of the family firm and its trans-generational strength is in living the charter across generations.
Strong values and relationships make for good family governance. This in turn nurtures good corporate governance. Institution building and perpetuity might then be possible.
Prasad Kumar specialises in family business advisory.