Enforcing family governance critical

self-employment, to create material comfort.
In most cases, each of the family members creates their own seed capital and reinvents the wheel in learning and setting up businesses.

Traditionally, family gatherings take place at funerals, weddings, graduation parties or sometimes birthdays. These are short meetings. Discussions are seldom about wealth creation, save for when charging lobola. Members are often in a hurry to leave family gatherings, to go elsewhere and create wealth.
Meanwhile, dynamics, including inheritance, leadership and ownership, among others, are left to pester family settings, particularly where there are family businesses.

Therefore, it is not surprising that family governance is a topic, which most families are reluctant to address. This is in spite of the fact that governance problems stalk families day in day out. Contemporary business issues further complicate family governance, requiring as they do, systems that ensure fairness, business strategies, upholding of family values etc. Hence, family governance covers two broad topics: governance of the family and governance of the business.

Families are important in the creation of wealth. They are unique in that families are given to us, none of us chooses what families we are born into. This causes one to think that each household has inherent skills set, which if carefully exploited and governed, could prosper the family.
Since the days of Abraham, wealth has always been spoken of in terms of, forefathers passing it on to their children and grandchildren. Wealth creation is intergenerational. If it stays in one generation, then it remains mere riches. A phenomenon which is often witnessed among family owned businesses, in their inability to successfully pass on businesses to second generation.

Generational transitions, in themselves, are a deep challenge for a family not just within a business, but also to anyone who owns some sort of shared assets.
Any sort of enterprise faces difficulty when it gets to be more than 20-years-old. As it matures, it faces new competition, or declines. It needs fresh and new leadership. That type of leadership, which is not based on age, but has the ability to work for the common good of the family. For instance, through deaths of parents or siblings, members automatically assume family leadership, but lack leadership skills. Are leaders born or made? Over generations, new family owners emerge, who are siblings first, then a generation of cousins, uncles, aunts, nephews, nieces and in-laws. What does that mean to a family? What do they have in common?

Does the family have common values and goals? Why are they partners? Do they still owe any allegiance to the original visionary of the family or business?
Family members take pride in being members of a family unit, particularly if it is wealthy and well to do. Sadly, not all members have the drive to sustain the family legacy.

Complex emotional baggages impede members to carry on as a family. There may have been an amazing legacy of wealth, but as generations transcend, rivalries or jealousies across families emerge.
Was there covert favouritism? Was one branch kept out of management? Was someone unfairly treated? These issues become huge in a family and get worse in polygamous family business set ups.

Conflicts and disagreement are part and parcel of family units and enterprises. Severity of intra-family conflict is believed to be the largest cause to the undoing of family wealth. Family governance, allows such issues and conflicts to be discussed and hopefully, settled amicably, without destroying the family core or unit. Effective family governance systems could minimise these losses.

The rich and thoughtful discussions about who they are as a family and what they want their wealth to do for them is essential to the governance process. Just as a mission statement is important for businesses, family governance requires that members set family direction and provide guidelines to decision making.
Researchers argue that documentations such as, constitution, by-laws, protocol, mission statement, value statement, shareholders agreement or family council are not that important. Rather, what gives value to households is the acquired skill by members to listen to each other, learning to make accommodations and then arriving at a decision-making process honoured by all.

When conflicts arise, as they will, the family will not need to resort to lawyers and threatened litigation. They will instead have a time and place of their own to address those difficult issues in a respectful, not bossy manner, applying their own “rule of law.”
Governance is an evolutionary process. Through marriages, divorces, births and deaths, the nature of a family changes too. As a first step in family governance, it is therefore imperative, to address the definition of “family”. Who exactly is family? This initial question is in many ways one of the most serious and lasting questions.

It is focused on, which individuals should be included in the family, for family governance purposes?
As with any enterprise, family governance requires that the family meet regularly and for the clear purpose of finding best ways to creating wealth. This means that differences, criticisms, and conflicts, must be deferred. Meetings should be motivating and encourage members to attend.

An individual member must believe that he or she will be better off by relinquishing some individual freedom for the benefit of belonging to a family group. All governance is a system of allocating power.

Family leadership, while taking into account cultural norms, must incorporate household members who can be effective executives. As suggested by Peter Drucker, in “What Makes an Effective Executive”, family leaders must have a “We” not an “I”, attitude. They should be clear about what needs to be done in the family, to create wealth and at the same time know what is good for the family unit or business enterprise.

Good governance at family levels, if encouraged could have a huge impact on creating sustainable wealth. Learning to treat family members fairly, discussing conflicts and arriving at decisions good for the family.

Developing the skills to think in collective terms, rather than individualistically, is in itself training for other good governances, outside the family unit. Boardrooms, when filled with persons from such a trained family background, could then be able to make fair decisions for the good of all. Indeed charity begins at home.

If families could train their members to create and maintain wealth, through good governance, I believe that half the social and national problems that we face today, would be solved. As families, identify strengths and skills sets among its members, as well as encourage one another as individuals, then we will begin to have confident leadership.

The advantages to families that establish successful family governance and adhere to what they created can be very useful. It has the potential to enhance communication, reduce potential conflict, educate the next generation, sustain the family legacy, conserve the family capital, and build family leaders for the future.

Well-governed families, provide the foundation to a well governed nation.