Writing a family constitution is a demanding process under even the best of circumstances. Aside from a family business being required to recognise and agree to formulating such a document, the family will also find itself confronted with its own culture. Culture, whether defined by the context of the family business or the family itself, has a great impact on how successful writing a constitution can be. In the following article, Mark Evans, Managing Director, Coutts Institute, Coutts, explores the characteristics, which make a family likely to fail or succeed at the arduous task of formulating the family charter.

It is generally accepted that the main reasons for family business failure are based on a lack of trust, communication, and planning. Writing a family constitution or charter can help families avoid all of these potential pitfalls. The driving force behind the writing of a family constitution’s importance lies in its ability to bring the family together to discuss and agree on issues such as values, vision, purpose and code of conduct. Key to making this a successful experience is the family business understanding the family’s culture and where necessary, altering it. If the family business culture is not inclusive and there’s no desire to change, developing a family charter will only heighten family differences. If the family business culture is all-encompassing, or there is a desire to change the culture, it could create a stronger bond. A family constitution can be the difference between the family business succeeding or failing.