ABSTRACT
This chapter explores the common dynamics at play in family enterprises and why they require a special governance system. It reviews the history of family-owned governance systems and their common characteristics examine in depth the main features of family councils and family offices. Family councils take an active role in formulating training plans, career objectives and evaluation systems. Objective benchmarks are important to avoid the sink-or-swim model or what-worked-for-my-parents-will-work-for-my-kids approach that prevails in some family-owned firms. Family-owned firms that stand the test of time are grounded on solid governance structures and aspire to a more transcendental, less quantifiable incentive: the pride of making history. Conventional corporate governance instruments – boards of directors, executive committees and shareholder assemblies – are not enough in family-owned companies. A family council sits at the helm and oversees any matters that might overlap and affect business operations. The board of directors is undoubtedly one of the most important business governance structures in the family enterprise.
