Governance of the company
With regard to the governance of the company, just as in other companies an active board of directors is of crucial importance.
The board of directors will play a major role in the succession phase. Firstly, a well-functioning board of directors will serve as an ´insurance policy´ against the unexpected disappearance of the family manager due to sudden disappearance. In this situation, the board of directors will be able to ensure the continuity of the management.

More generally, the board of directors can help the family define its vision of the future and above all objectify the succession process. The board of directors can make a major contribution to calmly examining the various succession options which the family has and can accompany the succession process.
The board of directors can also play an important role in preparing the successor and in the ultimate selection.

Family governance
Along with governance of the company itself, in a family business attention must also be paid to governance of the family or family governance, above all in the succession period. Family governance consists of a shared owner´s vision, a family structure and agreements.

A shared owner´s vision
First of all, it is important that the family share the same owner´s vision. The owner´s vision distinguishes itself from the vision and mission of the company, which generally summarises in a catchphrase what the company stands for and where it is headed. The owner´s vision is the expression of the family´s most fundamental convictions with regard to the company. It is crucially important because it is the basis for the structure of ownership, the governance and the leadership of the family business (John Ward, in: Unconventional Wisdom, J. Wiley & sons, 2005, 35-55).
In most family businesses, the owner´s vision is deeply rooted. It goes back to the most profound beliefs of the founder. If the latter, for example, believed that the family business should be led by only a single person, one will frequently still find traces of this in the owner´s vision many years later.
Family businesses risk in being dragged into serious conflicts when the different family owners are not on the same wavelength about the owner´s vision. Often the result is that the owners´ block falls apart.
For example, it regularly happens that family owners whose owner´s vision differs substantially from that of the other family members wish to sell off their shares. This can sometimes generate a domino effect which leads to the sale of the entire family business.
According to John Ward, the shared owner´s vision presumes that the family agrees on six issues :

• the values for which the family stands;
• the basic philosophy (business first, family first, owners first or a balance between these philosophies)
• the type of owner one wants to be : operational owner, directing owner, passive owner, engaged owner.
• how the leadership of the family business is exercised (a single leader or a team)
• the scope of the strategy;
• the desired financial return, the risk profile and the share´s liquidity.

• is the place where family members confirm their involvement vis-à-vis one another and the family business. In this way it contributes to strengthening the family ties.
• is an organ of communication. It is the place where family members are made aware of information about the family business.
• defines the playing rules which the family members must observe with respect to the family business. These playing rules are established in the family charter to be discussed below.
• can strengthen the board of directors. Family members who are not really at home on the board of directors, because (for example) they are not sufficiently qualified, may have a voice in the family forum.
• monitors the respect of the family values by the family business.
• is the designated place to discuss and resolve certain (but not all) conflicts. Thus, experience has shown that problems and conflicts with the management or the day-to-day concerns of the family business are best discussed elsewhere.
• handles the training of family members and more specifically the successors, and regularly organises adapted educational programmes.

The family charter
It is virtually impossible to achieve the long-term vision of the family without clear agreements being reached within the family about important issues. These agreements are established in the family charter, a type of family constitution.
Agreements are necessary because they allow one to anticipate problems and conflicts. When a family is unexpectedly faced with a particular problem, coming up with the right solution is not always immediately evident. Often attention is devoted not to the problem but rather to the person who gives rise to it. Let us take the example of a family member who comes around looking for a job in the family business. It is a lot easier to deal with this when clear, objective employment conditions have been established in advance. If that family member does not meet the required criteria, he can be turned down without this necessarily resulting in a personal conflict. A charter will play an especially important role during a succession as well, since it will define what conditions the candidate-successor(s) must satisfy.
Every family is different, so that agreements must be custom-tailored. The content of the family charter also depends on the phase in which the family business finds itself, the size of the family, the number of active and passive shareholders, the culture of the family and the family business, the degree of harmony within the family, and so on. Yet most charters will devote attention to the following subjects :

• the family values and vision
• the ownership of the family business
• the financial objectives
• careers within the family business
• compensation for active and inactive family members
• the governance of the family business
• the governance of the family
• the role of non-family members in the family business
• communication
• family harmony and conflict
• education and training
• philanthropy