M58InstitutionaliseInstitutionalisation· Module 2
Governance
Owners, family and managers make decisions informally. Nobody holds the managers — or the founder — to account.
- Institutionalise
- Scale
- Governance
- Leadership
- ~5 min · Template
The business problem
In many founder-led and family businesses, there is no distinction between ownership, oversight and management. Owners intervene in daily operations, family matters and business matters are mixed, and there is no forum to challenge the founder's decisions.
Why it matters
Proportionate governance — a board or advisory board, clear roles for owners and managers, and regular oversight — improves decisions, reduces conflict and builds confidence with lenders, investors and partners.
What you will learn
- Distinguish ownership, governance and management roles
- Choose a proportionate structure: advisory board, board, family council
- Define what the board decides and oversees
- Run effective board meetings
Core questions
- Who holds the managing director accountable?
- Which decisions should need board approval?
- How are family and business matters kept separate?
- Who provides independent challenge?
Work through the module
CaseWhat is happening?
Family-owned manufacturer, 120 people · Illustrative teaching case
Three siblings own a manufacturer; each manages a department and they disagree on investment. Decisions stall. They form a board with an independent chair, agree a reserved-matters list, appoint one sibling as managing director with clear authority and create a family council for ownership matters.
DecisionWhat does the leader need to decide?
Continue deciding among owners informally, or establish formal governance?
FrameworkHow should they think about the problem?
Owners, board, management
Owners set objectives and appoint the board. The board sets direction, approves reserved matters and holds management to account. Management runs the business. Each layer has a defined role and meeting rhythm.
ToolWhat can they use?
Governance starter kitTemplate
- Board or advisory board composition
- Reserved matters list
- Board calendar and standard agenda
- Board pack contents
- Family or shareholder agreement topics
ApplicationHow does it apply to their business?
Apply it to your own business:
- List decisions that should require board or owner approval
- Decide the right structure for your size
- Identify one independent adviser
ImplementationWhat changes?
What should change in the business:
- Hold quarterly board meetings with a standard pack
- Document reserved matters
- Separate family discussions from business decisions
ReviewDid it work?
How to tell whether the change worked:
- Are board meetings held and minuted?
- Are reserved matters respected?
- Has conflict among owners reduced?
After this module you should be able to decide
Continue deciding among owners informally, or establish formal governance?
And leave with: A governance structure proportionate to your business.
Sequence · Institutionalisation