Thank you to all delegates, speakers and sponsors who joined IFB National Conference 2018. It was inspiring to see so many current and next generation family business members gathering from all over the UK and around the world to share experiences and learn together about all the facets of family business governance. IFB National Conference truly epitomises the power of the IFB community.
Below you'll find some key insights from the event:
- There are many examples of successful family business governance. And because there is no one size fits all model, the opportunity to talk to other family businesses and explore how they have approached governance in practice can be extremely helpful to develop the best path for your own business.
- Family businesses, especially as they grow and develop across generations, become more complex. They evolve from just doing business, to being diversified enterprises. This provides shareholders with many other opportunities to become involved in the family business than working in it. These may include getting involved in the family governance structure (like the family council, next generation groups, etc), becoming members of the Board or NEDs, taking part in family social impact activities (such as philanthropy and community engagement projects), or getting involved in diversification projects.
- Shareholders’ engagement will help strengthen cohesion and alignment of purpose, which is highly beneficial for the success of a family business. It helps create responsible and enlightened shareholders, and avoid entitlement.
- Good governance can start with the individual, by examining their behaviours and their impact on themselves, their relationships and wealth. The way family business individuals approach their relationships with each other and with their wealth depends on their own story. In order to feel safe within your family business, that is within the relationships and the wealth that compose it, it is necessary to feel safe with oneself first. One way to do so is by looking at past events in one’s life, what kind of thoughts these generated and, in turn, relevant feelings, beliefs and subsequent behaviours. Only by holding themselves accountable for their own behaviours can individuals become successful leaders.
- Reaching high levels of trust is a crucial aspect of a successful family firm. Trust should run through the whole family business, between shareholders, between the board and executives, executives and employees, employees and the company, and customers, communities and the company.
- A breakdown of trust at any level can pose great risks to the company and destroy its positive impact throughout. Having a trust catalyst can help deliver outcomes that are in tune with the company’s values, whilst creating positive exchanges and holding the family and the company to account. Often, trust catalysts are not leaders or executives, but individuals trusted by those with authority.
- Corporate governance should be there to contribute to build trust, not check and balances.
- Family governance is just as important as corporate governance for the success of a family business, especially as the family and the business grow across the generations.
- If you are a successful firm, you must be already doing something right. To identify what this is, it is important to explore your natural family governance. First, by looking at the past and how the family has been doing things so far, based on their purpose and values (the why), and at what norms and expectations you have in place, whether they are written or unwritten (the how). As the family and the business grow and they become more complex, your natural family governance will inevitably be challenged. You’ll find that adaptive change becomes unfeasible and you’ll most likely encounter a gap between the needs of the business and the talent and interests within the family pool. It is therefore important to explore together the boundaries of the family, asking questions about the future: who is family? Who can become an owner? Who a business leader? And to set up or develop your family governance (the what). This involves fair structures, processes and policies that achieve transparency and organised accountability among the owners, the family and the board in service of a clear shared purpose.