Why to Adopt Formal Governance Mechanisms?

There is an increasing global trend for family owned businesses to take on a more formal governance. According to our latest survey (“Family Businesses: optimistic, entrepreneurial, open to disruptive technologies”): 52% of companies have a formal board of directors (39% in 2011), 51% of companies have a formal policy in place when it comes to the selection, remuneration and promotion of family employees (26% in 2013), 43% of companies have a shareholder’s agreement in place (36% in 2013), and 31% of companies have a Family Constitution or code of conduct (20% on 2011). The latter, in particular, is a sign of the serious intent of family-owned concerns to develop a shared vision of their company. It is also an excellent way to side step major conflict.

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