Apart from the board and management, the family ownership group has distinct roles and responsibilities.
Each group, the board, the owners and management plays an essential and interdependent part in an effective governance system. With the concept and significance of ownership less understood than the concepts of boards and management, directors would be ideal to provide invaluable guidance to owning families as they try to understand their role.
Responsibilities of the owner include respecting the limits of ownership roles and providing the leadership for the governance process. A board, to serve well, must have clear understanding of the proper roles and responsibilities of the family ownership group. The following framework outlines the ownership roles and responsibilities.
- A united, committed and responsible ownership provides substantial value to the continuity of the enterprise. It allows the management to focus on the business and also enhances their strategic stability and risk taking. Responsible ownership reassures the management, board and other shareholders.
- The collective values, vision and goals will determine the purpose of the owners. Owners’ values, such as stewardship, transparency, paternalism, innovation, trust and democracy, shape the culture of the business. Values also shape the vision for the business. They must also attempt to present a set of goals for the business that satisfies their interests and secures their commitment, yet are reasonable for management to meet.
- In addition to values, vision and goals, the owning family needs to address the issues that define its relationship with the business. Finally, the decision-making process needs to evolve over time as the next generation of family owners grows in age and conviction