Benefits of Having a Family Constitution in the family business


 Our earlier communication defined the meaning and contents of the family constitution. Here we list some of its main benefits for the family business.

Benefits for Family Business

  1. Easy access and quick reference. The constitution is quickly and easily accessible by the family members for referencing important information that has already been agreed by the family.
  2. Quick decision-making. The quick and easy reference facilitates quick decision-making on items that are related to the constitution, such as on family employment and family compensation.
  3. Clarity, transparency and alignment. The constitution communicates the same facts in the same language to all family members. This reduces, even possibly eliminates, the need for opinions on these subjects and ensures continued alignment by the family members.
  4. Reduced conflict. The early commitment of the family to the constitution helps in significantly reducing conflict among family members
  5. Continuity. The constitution supports the long-term sustainability of the family by articulating clear succession and shareholding plans and guidelines.
  6. Reinforcing family values and sustaining legacy. The constitution clearly articulates the family values that guide its mission, supports the alignment of the business goals with these values, and serves as guidance for the family in its dealing among themselves and with the business and its stakeholders.
  7. Professional governance. The constitution is one formal governance structure that helps in balancing family interests with professional management, and as such it ensures consistency in communication and decision-making.

On the other hand some disadvantages of not having a family constitution include:

  1. Ambiguity and lack of clarity
  2. Delayed or overlooked succession planning
  3. Increased opportunities for conflict due to reduced clarity and using personal opinions and judgements on key matters.

For more information please contact us at info@flairadvisory.com.

Continue Reading - Blog Source: https://flairadvisory.com/benefits-of-family-constitution-in-family-business/


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