Transforming a Family Business to a Corporate

Transforming a Family Business to a Corporate

The founder of every flourishing family business confronts an inescapable question: How should our means of working grow to meet the challenges of handling a developing corporation? Master minds usually tell initiators that the solution is to professionalize, denoting that they need to match the structures, governance, networks, and procedures of a modern company. It is their responsibility to describe, direct and run the business, place strategy and decide priorities. In doing so, they need to bring consistency and precision to many vital questions, such as: what type of organization the founders want to set up; when must family members take up a position in the business, under what circumstances, and with what coaching; how to manage the succession procedure; and what dividend strategy to undertake.  

In order to reach the highest level of integrity and competence, the members of the family business must begin by deciding which of its unique features—its creative abilities, its driving spirit, or its distinctive strong points—have allowed the company to prosper. The business should then embrace the attributes of a modern corporation that will heighten those qualities and that fit with its values. Professionalizing does not mean detaching the family from its part in the business; however, it does mean making a thoughtful choice to describe precise roles for the family and for proficient managers. This method will allow the business to benefit from exceptionality where it matters and prepare for scale where it is required (Davis, 2020).

Here are a few steps that will enable a family business to professionalize: 

1. Outline the Family’s Role

Primarily, family members should come to an understanding on the need to professionalize and simplify their vision for the business’s future. They must support their ambitions for the business and for themselves.

Outlining each generation’s exact role is important. In many instances, it is difficult for older family members to walk away from a business that has been the central focal point of their lives. And in certain circumstances, their lasting participation can be beneficial to the enterprise, if it is correctly directed. Rather than attempting to avoid the older generation, the business must recognize methods to make the best use of its abilities. For younger family members, the challenge is to enhance their participation in ways that are suitable given their skills and willingness for leadership.

2. Reinforce the Governing Bodies

A proper governance allows a family business to remain being competitive and in tune with the business surroundings. However, governance must be addressed at four stages, each of which must be evidently described and consistent with the others.

The Family 

The family should determine how it will be governed and in what manner it will manage its relationship with the business. Quite a lot of families take on an all-inclusive family governance exercise, whereas others aim to address only the fundamental concerns—that is, the family’s role in the business and in what way it will make decisions associated to the business. 

Majority of families address the question of governance through two bodies: the family assembly, which copes with a wide set of family alignment problems, and the family council, a minor body that copes with the family’s relationships with the business (Davis, 2020). 

The Board of Directors 

By welcoming non-family members to join its committee of directors, a family business obtains access to executives and experts who can offer valuable insights that help in decision making.

The Corporate Centre 

Most family businesses, particularly those that are diversified, create a “corporate centre” as an additional stage of governance. Its main function is to help the family run the business and support the numerous business units accomplish their goals. Corporate centres can take on countless forms, varying from “light” centres that only place and review targets to “heavy” centres that strive to drive performance, functional decisions, and collaborations across business units. 

The Executive and Management Committee 

The family needs to clearly explain the roles of the company’s management team and how it will make decisions. This usually includes forming an executive and management group. To be productive, the group must concentrate on strategic and policy matters and circumvent jumbling its agenda with operational problems.

3. Strengthen the Company

The process of professionalization entails strengthening the organization itself. Some components are especially essential to a well-functioning enterprise.

The Leadership Group - The family should decide who will lead the company, control the leadership group’s structure and composition, and set forth the prospects for the group’s performance. Moreover, the family should organize for the lively support and training of the leadership team for at least a year. This is crucial to guaranteeing that the new leaders have the time they want to build their skills.

The Organization Structure - The structure must support the organization’s growth objectives over three to five years rather than its projected needs ten years out. The structure must also reflect the organization’s values and history. To ensure positive cooperation, role mandates within the structure must be distinctly presented and communicated.

By Nathasha Hindurangala


Davis, J. (2020). Professionalizing the Family Business | It’s Not What You Think It Is. Retrieved 10 August 2020, from

     Image Reference 
    Cover Photo : Photo by Ruthson Zimmerman on Unsplash