The family constitution is perhaps the most critical challenge of strategic planning for the family business. It details the core values, vision and mission of the family business. It defines the governance structure of the family business with its roles, composition and powers. A well-developed family constitution can ensure strength, evolution and ultimately the family legacy.
As a living document, the family constitution itself must evolve as the family business and the operational environment evolves. Executive education designed especially for members of business-owning families can be an excellent way to learn to master the family constitution.
Family business dynamics: truly unique
Family businesses are all unique, but there are a few distinct features they have in common - and these features are those that distinguish them from other companies:
All family members, even those not directly involved in the business, have an interest in the company’s success
The focus is not solely on building a strong company: the business can reinforce family values and family bonds
Over time, family businesses become more complex: generations expand the number of people involved, ownership may be split, diverging interests can lead to conflict, and succession is a multifaceted concern
Family constitution: vital to the family business
The family constitution, done well, is able to provide the strategies to rise to these challenges. Among the most important things the family constitution should cover are:
The leadership of a family business must be committed to maintaining the constitution as a living, growing contractual document, essential to the good governance of a family business. Good knowledge of strategic planning in general and the family constitution in particular is necessary for every family member in the leadership team.
Executive education: value to the family constitution
Some of the top business schools in the world offer leadership programs and services directly targeting the unique needs of family businesses. IMD, a top-ranked business school in Switzerland, is a good example. IMD has a long history of working with family businesses – in fact, it offers the world’s longest-running family business leadership program.
IMD family business leadership programs help business-owning families to master challenges like the family constitution by helping family members:
Explore case studies to see how the most successful family businesses in the world approach unique challenges like the family constitution.