What Makes For An Effective Family Constitution?
This post is based on the research article Do we practice what we preach, presented at the Annual International Family Enterprise Research Academy conference in 2025.
Many business families have a family constitution – but far fewer have one that truly guides behavior, and even fewer have one that strengthens alignment over time.
A family constitution is often described as the cornerstone of family governance; a document that captures values, clarifies expectations, and provides guidance for future generations. In practice, however, constitutions vary enormously in their purpose, quality, and impact. Some become living reference points that foster cohesion and responsible ownership. Others are drafted, signed, celebrated, and then quietly forgotten.
The difference lies not in the length of the document or the sophistication of its language. It lies in the process that was used to develop it, how well it fits with the family’s values, culture, and goals, and with how well the constitution is lived.
No Two Family Constitutions Are Alike (*nor should they be)
Over the past decades, family constitutions have become increasingly popular. Families adopt them for many reasons: succession is approaching, ownership is expanding, next-generation members are asking for clarity, or conflict has surfaced and must be addressed.
Sometimes constitutions are developed because “other successful families have one.” Sometimes boards, advisors, or lenders recommend them. Sometimes they are drafted in response to a painful event. But a constitution created for the wrong reasons, or in the wrong way, often becomes ceremonial, or actually ends up doing more harm than good.
Research shows that family constitutions are as heterogeneous as the families who create them: Our research shows that some constitutions are what we call “control-oriented”, as they are designed primarily to prevent conflict and manage risk. Others are what we refer to as “support-oriented”, focused on strengthening shared identity, purpose, and commitment. And it is not that either approach is inherently right or wrong: the question is whether it reflects who the family is, their strengths and constraints, and their objectives.
The problem with this? Many families are not clear as to what problem they are truly trying to solve with a family constitution. Are they worried about a lack of next generation engagement? Do they feel that passive owners – those not working in the family enterprise – are not participating enough? Are they worried about compliance? Do they simply want to foster family unity? Understanding what we are trying to achieve with the constitution sets the tone for not only the content, but also the process.
The Process Is Key
In many cases, families focus heavily on what the document should contain: vision statements, employment policies, dividend rules, governance structures, amendment procedures. And while all of these matter, research increasingly suggests that the process of developing the constitution may be more important than the final document itself
Why? Because a constitution is, at its core, a formalization of a psychological contract within the family. It represents a shared understanding, an agreement about how we treat one another, how we relate to the business, and how we steward the enterprise across generations. If that shared understanding is not truly shared, the constitution becomes fragile – and if key family members are excluded from meaningful participation, emotional commitment remains shallow.
In our experience, the drafting of a family constitution is not a legal exercise – it is an opportunity for the family to clarify who they are, what they stand for, and how they want to make decisions together.
Execution Gaps: When Words and Actions Diverge
One of the most overlooked risks in family governance is what we call the execution gap; the discrepancy between what a constitution states and how the family actually behaves
For example, a constitution may state that family employment requires specific qualifications. Yet an exception is made when a powerful family member intervenes. Or the document may emphasize transparency and fairness, but information continues to flow unevenly across branches. These gaps between intent and behavior matter.
Research grounded in Behavioral Integrity Theory shows that when people perceive misalignment between stated commitments and observable actions, trust erodes. In a business family, where relationships are deeply intertwined with identity and history, even small inconsistencies can have outsized effects.
And execution gaps do not always arise from bad intentions! Families evolve, and circumstances change; documents are but snapshots in time. But when constitutions are treated as static artifacts rather than living frameworks, misalignment becomes almost inevitable.
A constitution only strengthens a family if it is revisited, interpreted, and upheld consistently, and if deviations are addressed openly rather than ignored.
Governance Must Fit the Family
Not all families need the same level of structure. Some families thrive with highly formalized governance; councils, committees, clear policies, structured meetings. Others function effectively with lighter structures and more informal coordination.
It’s all a matter of fit – and fit exists when governance practices reflect:
The family’s value and goal system
The family’s level of maturity
The family’s capacity to handle the consequences of certain rules
Families differ in what they prioritize. Some emphasize harmony and cohesion. Others prioritize performance and growth. Some are highly aligned around a shared legacy. Others are navigating diverging visions across branches and generations.
Families also differ in maturity. Family maturity encompasses functionality (how well members communicate and resolve conflict), ownership competence (how prepared members are for their roles), and sustainability (how effectively stewardship is cultivated across generations)
A highly structured constitution may stabilize a family experiencing fragmentation, but it may needlessly frustrate a high-trust family that thrives despite ambiguity. A light-touch constitution may work beautifully in a high-trust family, but it can foster conflict in a system that struggles with trust and effective communication. The same mechanism can strengthen one family and destabilize another, which is we resist off-the-shelve, “best practice” prescriptions.
What a Thoughtful Constitution Process Looks Like
When we support families in developing or refining a constitution, we begin not with the document, but with the family. We ask, for example:
What are your core ownership-related goals?
What tensions are you currently experiencing?
What do different branches and generations expect from ownership?
Where are you aligned, and where are you not?
How do you currently handle disagreement?
Only once these questions are explored do we turn to structure.
A well-designed process typically includes:
Individual and small-group conversations to surface perspectives and concerns.
Facilitated dialogue sessions to align around shared values and long-term objectives.
Collaborative drafting, ensuring clarity without over-engineering.
Clear governance integration, so the constitution connects to councils, boards, and policies.
Revision mechanisms, acknowledging that the family will evolve.
The goal is to create clarity, commitment, and behavioral alignment.
A Living Framework for Generational Continuity
At its best, a family constitution strengthens trust, transparency, decision-making capacity, intergenerational engagement, and responsible stewardship. At its worst, it becomes a document that signals professionalism without shaping behavior.
A family constitution should not merely articulate ideals. It should reinforce identity, guide action, and help the family navigate inevitable tensions with integrity.
