Wealth of Wisdom

CHAPTER 55Using RACI to Determine Roles and Responsibilities in a Complex Multigenerational Family Enterprise

Kathryn McCarthy

To say that families and family enterprises are complex systems with many interrelationships is quite the understatement.

We've all had experiences with the “many hats” that family members wear. One and the same family member can be a trustee, beneficiary, chief executive officer, foundation head, spouse, etc. The same holds true for the multitude of participants in the family enterprise structures. Have you ever been asked, “I don't know where in our family enterprise to bring this issue up?” or “Who is ultimately responsible for making the decision about XYZ?” or “Why don't I ever seem to know on a timely basis what decisions have been made?”

The family enterprise structure and system, which often includes the family office, family foundation, operating businesses, trusts, trust protectors, family council, close advisors, and other operating partners, can be fertile ground for confusion and duplication if not managed efficiently and with transparency. Even with a very detailed organization chart and robust governance practices, like a family council or a family office board, questions arise. For example, which entity in the family enterprise structure is responsible for developing a strategy that may impact other parts of the family enterprise? Likewise, who or what group needs to be informed of these decisions and activities? Which group(s) needs ...