Toolkit

IFC Family Business Governance Handbook

June 30, 2011

The IFC Family Business Governance Handbook is a concise and practical description of essential family business governance components and suggested approaches to resolving common family business governance dilemmas.

It is intended to complement existing tools currently being used within IFC to assess the governance of family business clients.
 

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  • The Introduction outlines inherent strengths and weaknesses that define the majority of family businesses, and analyses challenges faced during the evolution process of a typical family business through 3 stages: Founder, Sibling Partnership, and Cousin Confederation.
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  • Section I takes a look at the multiple overlapping roles often played by individuals in a family business, and the peculiar challenges that this tendency to wear multiple hats can pose to family businesses.
     
  • Section II explains the necessity of developing a clear family governance structure as different generations join the family business, in order to prevent potential conflict and ensure continuity. This section also presents examples of a family constitution and a family employment policy from IFC clients.
     
  • Section III discusses the role, structure and composition of the board of directors in a family business as it grows in size and complexity. It examines three important elements over time: the Advisory Board, the Board of Directors, and Independent Directors.
     
  • Section IV stresses the extent to which senior management affects the performance of a family business and its ability to generate wealth. This section compares family versus non-family managers, and provides basic guidelines for establishing a sound CEO succession plan.
     
  • Section V presents advantages and disadvantages that a family business could experience by going public. There is also a table of governance best practices that are useful for companies seeking to project a positive image to the market while planning to go public.

 

Translations (All publications are in a pdf format):

Related Links:

Feature Story: Family Businesses Fuel Growth in Emerging Market Economies, IFC Handbook Now Available in 21 Languages, August 2018

Editorial: Family Institutions: The Realities of Implementation, Tharawat Magazine, Issue 28, 2015

Editorial: Good governance holds the key for family business, Ethical Boardroom, Winter edition 2014

Video: Family Business Governance: Examples from Egypt and Colombia, April 2014 (video in Spanish) 

Private Sector Opinion 28: When grandpa is also the CEO - resolving differences in family-owned businesses, September 2012