This archive report was first published on 12 November 2019.
Family businesses have long been a staple of the private sector, with many being run by families for generations. However, this model comes with its own set of challenges, particularly when it comes to governance.
According to Moses Kemei, a Member of the Institute of Certified Secretaries, poor governance can be a major risk factor for family businesses. 'Diversity is a leadership challenge, as diverse boards are probably more complex to lead, but more effective at what they do.'
One of the key issues with family businesses is that they often lack a clear succession plan, which can lead to a lack of checks and balances. This can result in poor decision-making and a lack of accountability.
However, there are steps that family businesses can take to improve their governance. Implementing a suitable board structure, where family members are restricted and independent board members are brought in, can help to ensure that the business is run in a balanced and responsible manner.
Additionally, having a diverse board with a range of skills and experience can help to prevent 'groupthink' and ensure that the business is able to adapt to changing circumstances.
Ultimately, good governance is key to the success of family businesses. By implementing effective governance structures and practices, family businesses can ensure that they are able to sustain themselves over generations and remain competitive in a rapidly changing business environment.
Published on November 12, 2019
