Governance and Decision-Making domain

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The design, organization, and implementation of all of the self-management and decision-making structures and processes necessary for UHNW families and family enterprises. 

The Governance and Decision-making domain covers all of the structures and processes that relate to how an UHNW family manages itself within and across generations. Governance structures include those formalized activities that manage the two core areas of family enterprise governance: the family side and the enterprise side. On the family side, typical structures include family councils, family boards, and/or family assemblies, with support from committees and programs to implement initiatives. On the enterprise side, typical structures include owners councils or shareholder boards, holding companies, boards of directors, management or corporate boards, and related substructures for any operating company that may be present or for other assets and investment vehicles. Governance processes include the policies and documents that help formalize how the family enterprise functions, including family constitutions, shareholder agreements, buy-sell agreements, family office policies and procedures, and the like. The domain includes governance and decision-making procedures for related entities such as family foundations, family offices, private trust companies, and any other mechanisms by which the family enterprise manages itself and its responsibilities.  

A major area of responsibility in the domain is in having procedures and mechanisms in place for conflict management for both the family and the enterprise sides. Stresses and conflicts that naturally arise within a family enterprise need to be brought forth, clarified, managed, and resolved using appropriate procedures, optimally developed in advance of the problem as part of effective governance. The domain also covers those adaptations in governance and decision-making that must occur across generations as the family and its enterprise entities grow, mature, and require transformation due to internal and external circumstances.

The Governance and Decision-making domain is a component of the Cultivation of Family Capital cluster in the Ten Domains of Family Wealth model of The UHNW Institute. 

See Also: The Ten Domains of Family Wealth

Hauser, Barbara R. “Family Governance: Who, What, and How.” The Journal of Wealth Management 5, no. 2 (July 31, 2002): 10-16.

Jaffe, Dennis, and James Grubman. “The Two Pillars of Governance in Family Enterprises: A Straightforward Understanding of Complex Systems.” The FFI Practitioner, 2020.

The UHNW Institute. Our Thinking, December 15, 2022. https://www.uhnwnstitute.org/our-thinking/

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A Glossary of Family Wealth Advising Terms

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The Wealthesaurus provides standardized definitions of common and specialized family wealth advising industry terms. By sharing this glossary, we hope to improve communication across the UHNW community.

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