Family charters (also known as family constitutions or protocols), are foundational documents that define guiding principles and rules of interactions between family members in relation to the assets they own collectively. They serve as a blueprint for managing both family dynamics and business interests, helping to sustain family harmony and business continuity across generations.
A family charter is not legally binding, its power stems from the emotional commitment from family members to uphold it. It is therefore crucial that all relevant family members participate in its creation.
Below, we explore the essential elements of a family charter and offer a six-step guide for families looking to create one.
A thoughtfully crafted family charter brings clarity and cohesion to how the family interacts with their assets, ensuring everyone is working toward common goals. It reduces the risk of misunderstandings and promotes cooperation, making it easier for family members to navigate challenges together.
Specifically, a family charter should define the following areas:
Values and vision: Define the core values that unite the family and the vision for the future of the business. This section sets the tone for the entire document and aligns family members around a common purpose.
Governance structure: Outline the governance framework, including the roles and responsibilities of family members, family councils, boards of directors, and any other governing bodies. This section clarifies who makes decisions and how those decisions are made, preventing confusion about who holds authority and ensuring smooth governance and responsible management. It should also define the mandate and the process of election for each of those roles and responsibilities.
Employment policy: Establish guidelines for the involvement of family members in the business and family structures, including qualifications, recruitment process, compensation, and performance evaluations. This helps maintain professionalism and ensure accountability, as the boundaries between family and business can easily be blurred.
Succession planning: Detail the principles of succession, including education and training of the next generation, the criteria for selecting successors, and the timing of transitions. Clear succession planning ensures business continuity and prepares the next generation for leadership roles.
Ownership and wealth management: Define policies regarding the transfer of ownership, dividend distribution, and financial management of the assets. This section often includes rules for buying or selling shares, as well as guidelines for reinvesting profits into the business.
Conflict resolution: Include mechanisms for resolving conflicts among family members, such as mediation or arbitration processes. This helps to address disputes constructively and prevent them from escalating.
1. Start the conversation
Gather key family members for an initial discussion about the importance of a family charter. This is an opportunity to align on shared goals and clarify the potential benefits of having a guiding document for both the family and its business interests.
2. Involve a facilitator (optional but recommended)
An impartial third-party facilitator, such as a family business adviser, can help guide discussions, especially if sensitive topics arise. A facilitator can ensure everyone’s voice is heard while maintaining focus and momentum, and can help take out raw emotion from interactions between family members
3. Hold family workshops
Organise a series of workshops to openly discuss core topics like values, governance, succession, and conflict resolution. These workshops allow all family members to contribute, ensuring the final charter reflects the collective input of the family.
4. Draft the charter
Once the main points are agreed upon, draft the family charter. The document should clearly outline the family’s vision, roles, responsibilities, and processes. It will likely go through multiple revisions as the family refines its content.
5. Finalise and commit
After final reviews, formalise the family charter through a symbolic event, such as a signing ceremony. This reinforces the family’s commitment to upholding the charter’s principles.
6. Review regularly
A family charter should evolve as the family grows and circumstances change. Schedule periodic reviews to ensure the document remains relevant and aligned with the family’s current needs and future aspirations.
A family charter is much more than a written document; it’s a guiding blueprint for a family’s future. By providing clarity, structure, and a shared vision, it helps foster strong relationships, effective governance, and a lasting legacy. Though creating a family charter requires time, effort, and collaboration, the long-term benefits it provides to both the family and its assets are invaluable.
For further information about any of the insights shared above or to find out more about Bedrock’s Family Strategy and Governance services, please do reach out info@bedrockgroup.ch.
Author: Maria Villax, Head of Family Strategy and Governance at Bedrock
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