The following figure presents a governance structure which can function in most family businesses:

• The board of directors is a crucial player. It guides both the family owners and the management.
• The interests and needs of the family are addressed in the family forum. If the family does not have such a forum, there is a danger that family frustrations or emotions will be aired where they are not appropriate : at a board of directors' meeting, in the management committee or at the general meeting. They then threaten to disturb the functioning of this body, or even paralyse it. If emotions and frustrations can be expressed in the right place – the family forum – they will no longer (threaten to) impair the functioning of the family business. In larger families, it is sometimes desirable to also hold family meetings alongside the family forum, in which not only the family shareholders but also other family members participate.
• A number of decisions which the owners take in the family forum, receive legal form in the general meeting of shareholders, which - in contrast to the family forum - is a body provided for by the company law.

This model has the following advantages:

• clarity exists about the roles, rights and responsibilities of all players in the three circles;
• discipline is created, whereby family members, personnel members of the family business and owners behave in a responsible manner;
• the right of family members to have a say in business decisions is organised in an appropriate manner.

Naturally, there are overlaps between the different elements of the governance structure. These are typical for a family business, and perhaps even a bit unusual for those who see things from a conventional company-law perspective. These overlaps have the result that cooperation between the various governance actors is not only present, but even necessary.

A proper division of roles
The family owners, the board of directors and the management are the three players with respect to governance in the family business. For the quality of the governance it is important that the roles of these three players be carefully delineated. Each player must know what area is his, and he must stick to that area.

Policies
A red thread running through the debate on governance in the family business is the necessity of making clear agreements and establishing policies. This necessity is situated at the level of the family owners, the board of directors, the general meeting and the management. Moreover, it is also required that clear rules apply between the players, ones which are best set down in writing. The figure indicates which written agreements the family and the family business ought to have.

Fair processes
Both businesses and families are more hierarchical than democratic organisations. Moreover, within the governance structures choices necessarily have to be made which will disappoint some family members. These decisions will be more easily accepted by the individuals involved if they are arrived at via a fair procedure. This is the case when:

• all players can participate fully in the discussion and can make their voices heard;
• clear information is provided to all players;
• the policies are applied in a consistent manner;
• the policies adapted when contextual factors require it;
• fair processes in the decision-making are not only affirmed on paper, but are actually the object of a fundamental commitment on the part of the family.

Decisive teamwork
All governance structures – in particular the board of directors and the family forum – are actually teams. What's more, the entire governance structure is actually - as Prof. John Ward rightly notes - a "team of teams". It is important that these teams function as real teams. Moreover, they must be able to make the right decisions. In other words, they must be capable of being decisive. The proper perspective consists of regarding the various governance structures as social systems, whose success depends on the way in which the members cooperate with one another. A few tips from Professor Jeffrey Sonnenfeld of the Yale School of Management (Harvard Business Review, September, 2002) are also applicable to the governance structures of family businesses:

• Make sure that everyone strives for respect, trust and honesty. This can be facilitated by the fact that the members receiving information (even if it is bad news) in a timely manner, so that political game-playing is avoided.
• It is vital that the governance structures generate a culture in which constructive differences of opinion are not only possible, but even fostered. At the end of the day, structures which only consist of yes-men will show few results. In properly functioning structures, avoiding groupthink will be a priority. Constructive differences of opinion must not be regarded as a lack of loyalty; instead they should be constantly encouraged. One might consider systematically having one member play the role of devil's advocate. Anonymous votes or surveys can also sometimes yield refreshing results.