Why it’s important to define roles in a family-owned business

Whether you’re running a small family business or one that employs dozens of people, defining roles and governance is vital for any SME.

The basic roles in a company include ownership, governance, management, and operational.

Setting out a clear structure can bring long-term benefits and prepare your company for growth.

Ownership

aside from literally owning the business, these are the people responsible for setting out an effective governance structure and protecting the company’s future.  Owners need to have a succession plan and ensure that a transition happens as smoothly as possible.

Governance

refers to the people in charge of a business’s long-term strategic planning and objectives.  While the owner has the final say on where a company is heading, having a structured governance process ensures the owner’s wishes are being met.

Management

runs your business day-to-day, working towards quarterly, monthly, or annual goals.  They focus on bills, cash flow, and play an integral role in hiring and training.  Management doesn’t have to be part of the family — some business owners choose to have non-family members in charge, or choose an outsider to train younger family members into future management roles.

Operational

refers to the non-financial side of the company, for example, the people out labouring on the farm, or meeting clients every day.  Many family businesses view experience at this level as essential before moving up to a management role. Clearly defining these levels can help business owners manage career progression.

Setting out job roles and a clear structure is hugely beneficial for every business owner: it ensures everyone in the business knows what they are doing and what is expected of them.  It can help businesses work out their strategic and management goals and put together long term plans.