Workshop 7: Operating Principles (How You Work)

Expected Duration: 1-2 hours of full uninterrupted focus

Overview

Operating principles define the frameworks, decision-making protocols, and governance structures that guide how the organisation operates. They ensure accountability, transparency, and effective execution of your strategy while maintaining alignment with your values and objectives.

What You'll Achieve

By the end of this workshop, you will have:

• Clear governance structure and decision-making protocols
• Defined roles, responsibilities, and accountability frameworks
• Operating principles that support effective strategy execution

Pre-Workshop Preparation

• Review all previous workshop outputs (Purpose through Strategy)
• Consider current decision-making challenges and bottlenecks
• Please send any feedback to etienne@familyofx.com

Workshop Structure

Step 1: Ask These Questions

Consider these operational and governance questions:

• What decision-making protocols do we follow? (committees, consensus, majority vote, hierarchical)
• How do we ensure accountability and transparency in operations?
• What governance structures should manage conflict, succession, or major decisions?
• How do we balance the needs of different stakeholders? (family members, advisors, beneficiaries)
• What technology and systems do we need?
• What are appropriate time commitments and remuneration structures?

Step 2: Governance Mapping Activity

Materials Needed: Large whiteboard or flipchart paper, markers

A. Identify Key Roles and Responsibilities

Family Leadership Roles:

• Family Council Chair/Lead
• Investment Committee Members
• Next Generation Representatives
• External Advisory Positions

Professional Roles:

• Chief Investment Officer
• Family Office Manager
• External Investment Advisors
• Legal and Tax Specialists

Governance Bodies:

• Family Council
• Investment Committee
• Advisory Board
• Conflict Resolution Panel

B. Decision-Making Framework

Create a Decision Matrix (20 minutes)

Example Decision Protocols:

• Small decisions (day-to-day investments): Delegated to professionals
• Large decisions (asset allocation, new ventures): Require family or committee approval
• Strategic decisions: Family council with external advisor input

Step 3: Governance Structure Design

A. Committee Structure

Family Council

• Purpose: Oversee family values, philanthropy, and legacy initiatives
• Membership: Representatives from each family branch
• Meeting Frequency: Quarterly
• Key Responsibilities: Strategic oversight, conflict resolution, succession planning

Investment Committee

• Purpose: Portfolio strategy, risk management, and performance reviews
• Membership: Family members + external experts
• Meeting Frequency: Monthly
• Key Responsibilities: Investment decisions, performance monitoring, risk assessment

Advisory Board

• Purpose: External expertise on specialised areas
• Membership: Independent experts (tax, legal, investment, governance)
• Meeting Frequency: Bi-annually
• Key Responsibilities: Strategic advice, industry insights, best practice guidance

B. Communication and Reporting Framework

Regular Reporting Structure:

• Weekly: Operations dashboard to management
• Monthly: Investment performance to Investment Committee
• Quarterly: Comprehensive family update with financial and strategic progress
• Annually: Governance review and strategic planning session

Step 4: Conflict Resolution Protocols

Define Escalation Process:

1. Direct Discussion: Encourage open dialogue between parties
2. Mediation: Family Council or designated mediator facilitates
3. External Resolution: Independent governance advisor or professional mediator
4. Final Authority: Predetermined decision-making body or process

Example Protocol:"Disputes are initially addressed through direct dialogue. If unresolved within 30 days, they're escalated to the Family Council. If the Family Council cannot reach consensus within 60 days, an external mediator is engaged."

Step 5: Operating Principles Development

Draft Key Operating Principles:

Decision-Making Principles

"Major financial decisions require approval from the Investment Committee, while daily operations are managed by our dedicated advisor with quarterly oversight."

Governance Principles

"The Family Council ensures alignment with family values and oversees philanthropic activities, meeting quarterly with all family branches represented."

Transparency Principles

"Quarterly updates on financial performance and governance decisions are shared with all stakeholders, maintaining open communication and accountability."

Conflict Resolution Principles

"Disputes are escalated to an external mediator if internal resolution cannot be reached within established timeframes."

Succession Planning Principles

"Leadership transitions are supported by mentorship programmes and defined criteria to ensure continuity and competence."

Step 6: Technology and Systems Framework

Consider Technology Needs:

• Portfolio management and reporting systems
• Communication and collaboration platforms
• Document management and security
• Performance tracking and analytics
• Compliance and regulatory reporting

System Requirements:

• Integration capabilities
• Security and privacy features
• User accessibility and training
• Scalability for growth
• Cost-effectiveness

Step 7: Performance and Accountability Framework

Establish Accountability Measures:

Professional Management:

• Performance-based compensation
• Regular performance reviews
• Clear KPIs and metrics
• Professional development requirements

Family Participation:

• Attendance requirements for meetings
• Preparation and engagement standards
• Continuing education expectations
• Succession planning participation

Governance Bodies:

• Committee effectiveness reviews
• Structure and process evaluations
• External governance audits
• Continuous improvement protocols

Expected Outcomes

This workshop creates operational clarity. You'll leave with:

• Clear governance structure with defined roles
• Decision-making protocols for different scenarios
• Conflict resolution and accountability frameworks
• Foundation for effective family office operations

Implementation Guidelines

Phase 1: Foundation (Months 1-3)

• Establish key committees and roles
• Implement basic reporting structures
• Create communication protocols

Phase 2: Enhancement (Months 4-6)

• Refine decision-making processes
• Implement technology systems
• Develop performance frameworks

Phase 3: Optimisation (Months 7-12)

• Review and adjust governance structures
• Enhance accountability measures
• Plan for future evolution

Best Practice Reminders

• Start Simple: Begin with essential structures and evolve over time
• Document Everything: Clear, written protocols prevent confusion
• Regular Review: Governance structures should evolve with the family and business
• External Perspective: Periodic governance reviews by external experts
• Family Buy-in: Ensure all family members understand and support the framework

Next Steps

Your operating principles will support Workshop 8: Metrics for Success (How You'll Measure Progress), where you'll establish KPIs and tracking systems to ensure accountability and progress toward your goals.

This workshop is part of the Family Office Strategic Planning Series. Each workshop builds upon the previous one to create a comprehensive framework for long-term success.