This chapter discusses the challenge of allocating decision‐making power among owners, board, and management, and in some cases the wider family. All decision‐making power within a corporation initially belongs to the owners. Statutes and codes governing business entities provide a default allocation of decision‐making power, but also offer opportunities for very different allocations and thereby permit customized structures for reallocating decision‐making power in ways that might better suit the needs of a particular family and business. At one end of the spectrum, the owners can retain all powers and control all decisions, which is the model seen in very small one‐person businesses. Founder‐run or controlling‐owner businesses typically exhibit some degree of delegation to a board and management, but retain considerable power in the hands of the controlling owner. At the other end of the spectrum, owners can delegate most powers and choose to be relatively passive.
For engaged owners who have enumerated their core capital and articulated a shared purpose and vision, and have begun the work of creating forums for family, business, and ownership discussion and decision making, the task is to allocate decision‐making power in a way that gives the owners a voice in the highest level of strategic decision making, and the family a voice in issues that affect them, while still giving the board and management leeway to operate the business.
This chapter then presents a method for creating an allocation grid to permit the owners to allocate decision‐making power among the groups and/or their forums.