Recently, I attended a workshop at the S. Dale High Family Business Center on family charters. Now, I am sure most family business owners think of a constitution as overkill and only useful for large family businesses. I tend to disagree and believe the presentation went a long way to help deepen my belief in the importance of governance in a family business.
Mike McGrann, the director of the Center, did an excellent job of presenting several case studies of family businesses that did not have a governing document. In each of these cases, a conflict surfaced that had not been previously discussed or documented and now caused a major conflict in the family. In one situation, a family member started a new company and the family did not have a conflict of interest policy. What made this even more difficult was this family member was running the most successful division in the business.