How can a multigenerational family business keep shareholders aligned and united? Most often through family business governance mechanisms, like a family constitution or family employment policy. Contrary to popular belief, though, governance mechanisms are not a sure-fire way to keep a family united and the business successful. Why?
According to Andrew Keyt and Claudia Binz Astrachan, once a family business establishes governance mechanisms, the family no longer revisits their purpose or evaluates their success. They become complacent, stuck on the past and present while failing to look ahead to the future. This complacency can lead to stilted processes, ineffective structures, and lack of accountability. How does a family business know if its governance is ineffectual?
Find guidance in “Frozen by design: Why your family governance system could keep you stuck in the present.” The five questions provided in the article will help you evaluate the effectiveness of your family business governance system.
Read about the five questions to evaluate the effectiveness of your family business governance system here.
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