Research paper on Family Constitution: The principle of fair business and transparency

The principle of the fair business and business transparency is the major principle which implies the transparency of internal business processes and decision making process. All family members share information about their decisions and actions with other family members. All processes are transparent and all family members are well-informed about all processes and decisions that take place in the family business. The family business conducts its operations transparently not only for family members but also for customers and auditors. The transparency is essential for the successful business development and the family business stands for the principle of transparency.

All profits gained by the family business are fairly distributed between family members. Family members take a decision on the further use of profits. Each family member has equal right to take a decision and to vote and to take decision on using funds of the family business. Each family member can take the decision to take his or her share of business but such decision cannot contradict to the interests of the family and the family business.

Policies of family and business relations

Decision making process in the family business

The decision making process is collective in the family business. The collective decision making process means that all family members participate in the business on the equal ground and they participate in the decision making process. Each of the family member has one vote in the family decision making process. The total number of votes is four respectively to the number of family members. Family member cannot grant the right to use his or her vote to another family member. At the same time, each family member has the right of veto to block any decision, which he or she considers to be dangerous for the business. In case of veto, family members should come to agreement on the decision and take the decision that meet interests of all family members.

Each family member can make offers concerning the decision making process and specific decisions. Each offer should be considered carefully and the family takes the decision uniformly, when all members agree to accept the decision. In such a way, the decision making process is homogeneous and involves all family members.

Family members can take decisions immediately, if they refer to their specific functions and do not affect other family members and interests of the family business. Each family member performs specific functions. Therefore, they do not need to coordinate absolutely all decisions. For instance, Marry Smith works as an accountant and she does not need to coordinate all her decisions with other family members, while she just performs her job properly. Therefore, the family members should coordinate and take collective decisions in matters that affect other family members and the family business at large. Family members should monitor the performance of the family business together and they should coordinate their actions. If they identify any problems, they should take decision closely all together, after the analysis of problems and current issues that affect the performance of the family business.