To overcome procrastination, think of family business governance as a gift exchange

Have you completed your Christmas shopping? Some shoppers start early and (quite literally) wrap things up weeks before the holiday. But others put it off until the last minute, requiring them to venture out on Christmas Eve to the few remaining stores still open, browsing picked-over shelves in hopes of discovering, if not the perfect gift, at least something marginally suitable.

The Problem with Procrastination

Just as those last-minute gifts often miss the mark, family business leaders who postpone governance are wrapping up problems for the next generation. Mark, co-founder of a successful manufacturing firm, has postponed governance too long. The result? Every important decision requires his approval, creating bottlenecks that frustrate staff and delay orders. His reluctance stems from two fears: confronting his mortality and doubting whether his son and son-in-law are ready to lead.

Successful Leaders ‘Study Governance’

Governance is simply shared decision-making about shared assets. In this brief (4 min) video, Professor Justin Craig of the John L. Ward Center for Family Enterprises at Northwestern University’s Kellogg School of Management says, “Successful leaders of family businesses become, in my experience, students of governance. Yes, they’re great at operations, and great at strategy, and all of these other things … But really what DEFINES their leadership is their commitment to governance.”

Typical Challenges 

While there are exceptions, family businesses typically evolve through three stages of development. Each stage has its own unique set of governance challenges. They become increasingly complex as the family grows and the enterprise matures. The chart below was created by John L. Ward and cited in the IFC Family Business Governance Handbook, available here. 

Governance moves from informal to formal as the family business evolves through these three stages.

Ownership Stage	Dominant Shareholder Issues
Stage 1: The Founder(s)	Leadership transition Succession Estate planning
Stage 2: The Sibling Partnership	Maintaining teamwork and harmony Sustaining family ownership Succession
Stage 3: The Cousin Confederation	Allocation of corporate capital: dividends, debt, and profit levels Shareholder liquidity Family conflict resolution Family participation and role Family vision and mission Family linkage with the business

The IFC Manual continues, “Most family-owned companies are successful during their infancy stage thanks to the tremendous efforts made by the founder(s) as they are implicated in all aspects of the business. In the longer term though, it becomes necessary to set up the right governance structures and mechanisms that will allow for efficient communication channels and a clear definition of the roles and expectations of every person involved in the family business.” As Joe Paul puts it in Balancing the Emotional Ledger: “… the natural development of the organization is from governance by personality to governance by policy and defined purpose.”

We offer expert facilitation enabling you and your family members, guided by advisors you trust, to develop appropriate policies and governance structures – ideally BEFORE you need them. If you are tempted to put this off, try thinking of governance as a gift exchange. You will need to make some sacrifices, yes; but the rewards are satisfying and enduring. We call this the give and the get of governance.

The Give and the Get

My former colleague Jay Mason had a talent for cutting through complex negotiations by asking one question: “What’s the give and the get here?” That simple framework – what each party sacrifices versus what they gain – applies perfectly to family business governance. It boils down the complexities to a few tradeoffs and returns.

The GIVE: What You’re Really Trading

1. Some unilateral control. Decisions shift from fast-and-solo to discussed-and-durable.
2. Time and attention. You’ll need to schedule some formal meetings, help people prepare for them, develop listening skills, and learn together.  
3. Money. You will invest judiciously in professional services provided by facilitators, accountants, attorneys, financial and estate planners.
4. Privacy and informality. Governance invites questions, dissent, and transparency that can feel inconvenient – or personal.

The GET: What You’re Building Instead

1. Continuity beyond the founder(s). The business no longer depends on one person’s authority or stamina; it gains durability across generations.
2. Reduced family conflict and decision paralysis. Clear roles, rules, and forums prevent disputes from becoming personal, public, or destructive. No more wondering who decides about dividends or whether a third gen member can join the business.
3. Stronger leadership and better decisions over time. The new structure balances independence and accountability. It draws upon diverse perspectives while preserving family unity.
4. Preserved wealth and relationships. This is your legacy. Governance protects enterprise value and family trust – so heirs inherit a functioning business and a healthy, well-functioning family. This blessed result is rare among family businesses. “About two-thirds to three-quarters of family businesses either collapse or are sold by the founder(s) during their own tenure. Only 5 to 15 percent continue into the third generation in the hands of the descendants of the founder(s).” (IFC Handbook, p. 14)

These are among the tradeoffs and returns of developing family business governance structures.

Humility Required

You might be thinking, “This sounds like giving up everything I have worked so hard to build.” But here’s the paradox: only governance creates the conditions by which your business actually outlives you. But what kind of leader has the confidence, drive, and mettle to create and grow a successful family business WHILE ALSO being willing to eventually support the development of policies and governance structures that limit his or her influence and require that power be shared? A Level 5 Leader. In his book Good to Great, Jim Collins describes the rare type of leader who builds enduring greatness into an organization. A Level 5 Leader combines deep personal humility with intense professional will.

In the eyes of such a leader, shared governance is not about giving up control. It’s about converting personal authority into institutional strength. By working with stakeholders to develop policies and governance structures, controlling owners of a family business trade short-term convenience for long-term influence over outcomes they care about most: legacy, value, and family harmony.

Many controlling owners – perhaps most, statistically – never get around to this work. Eventually, they leave a mess for their loved ones to sort out. Change is inevitable; the question is whether it will be by design or default. So why not think of governance as a gift exchange?

Next Steps

If considering the give and the get of governance has helped move you to action, start by assessing which stage your family business is in. Schedule a family meeting in Q1 to discuss one governance question. Contact us to explore how facilitation can help. The spirit of gift-giving reminds us that true generosity requires sacrifice – and yields lasting joy.