“Governance” in your family business: finding the right balance between family and enterprise

Developing a “governance structure” (or, more simply, “rules of good governance”) can help separate and balance these interests. Good governance is about agreements and structures that ensure your family business is managed in a transparent and sustainable way.

How does this work in practice?

1. Family council: building harmony together
   The family council is an informal consultative body where family shareholders come together to discuss non-operational topics: the long-term vision, the anchoring of values, and the involvement of the next generation. The rules for a family council are established by the shareholders themselves. For example: who is the chairperson, how often do family members meet, and so on. Many of these agreements are included in a family charter (more on this in a future article).
   Although not mandatory, a family council helps to maintain harmony and ensure clear communication. Through regular information exchange and open dialogue, family members remain involved and conflicts are avoided more quickly.
2. Board of directors: strategic decisions in good hands
   The board of directors determines the strategic direction of the family business and makes the most important decisions. In many family businesses, this board consists entirely of family members, but it can be valuable to appoint external directors as well. They bring specific expertise and an independent perspective, making decisions more professional and objective. A balanced composition helps to combine family influence and professional management, always prioritizing the interests of the family business.
3. Advisory board: independent expertise as added value
   An advisory board consists of external experts or entrepreneurs who provide strategic advice. They do not have formal decision-making authority but do offer a fresh, independent perspective and help to professionalize business operations. In practice, this is often seen as a stepping stone to appointing external directors to the board of directors.

Conclusion

Good governance in a family business goes beyond formal structures. It is about transparency, clear agreements, and finding the right balance between family values and business management.

Bodies such as a family council, a board of directors, or an advisory board lay the foundation for sustainable growth and harmony—today and for the next generation.

At PKF BOFIDI, you as an entrepreneur are central. With our “B-Family” services, we guide shareholders of family businesses in drafting and developing rules of good governance.