A family constitution
A family constitution is a documentation that has the rights, responsibilities, values, and rules to be followed by stakeholders. In the document, there is also a structure and plan of situations that may arise in the operations of the family business. A family constitution will help in ensuring that the stakeholders do their tasks diligently, and whenever there is a conflict, it will be resolved due to following the law. The constitution will control the family business since every generation will have set rules to follow.
A family business should be created as early as possible, and some amendments may be made over the years. There should be a consensus of all stakeholders while making the amendments. The culture of the family business should be followed throughout the generations. Business managers can use the family business for planning purposes of the company. The manager can involve other stakeholders by;
- Getting professional advice on how to draft the constitution.
- Consult other family members to get the goals of the business and plan for the activities of the company.
- Monitor the level of compliance with the constitution and decide if there are any amendments to be made.
- Before the start of the business, the family business should have been prepared.
The family constitution structure is as follows;
- Mission statement.
- Procedure for recruitment.
- Process of resolving disputes.
- Succession plan and retirement policies.
- Confidentiality of the business information.
- Periodic reviews of the company.
- Outline of how the assets will be shared between family members.
These structural arrangements will help the business entity in having a successful business venture even in future generations. The following generations will have rules to follow it will form a guide to them in case there will be disagreements of succession. In case there is any conflict between family members, the dispute will be resolved by being guided by the family constitution.
The succession of the family business leadership can occur when a leader dies or resign, or there are severe conflicts between members of the family. Leadership succession should be carried out from generation to generation by the family constitution. Each generation will have to follow the law to ensure the company grows.
Work cited
Hartley, Taryn. “Family Constitutions – What, When, and Why.” Lexology, 2 Nov. 2015, https://www.lexology.com/library/detail.aspx?g=e5d5c264-e453-4d03-b1a6-b93f958f9f17.