Stewardship is a term often used when describing the perspective of family business owners. As many owners of family businesses seek to pass their business on to future generations, the term stewardship is an accurate one. The dictionary definition of stewardship is “the careful and responsible management of something entrusted to one’s care.” This is quite different from the term ownership, defined as “the legal right of possession, full claim, authority or dominion.”
I see stewardship and ownership as two sides of the same coin – the former emphasizes responsibility, the latter emphasizes rights. In truth, ownership implies both rights and responsibilities. Too often, owners are concerned about their rights – to a dividend, to a say in how the company is managed – but pay less attention to their responsibilities. Yet, if they seek to pass on their business to future generations, owners should be equally or perhaps even more concerned with responsibilities. What are the responsibilities of owners? They include:
- Ensuring the business is well-run, ideally by electing a qualified board of directors who oversee a capable management;
- Planning for the orderly transition of ownership across generations;
- Staying informed about the business and its operating environment;
- Representing the business and family well to employees and the community
- Investing time in education to ensure one is prepared to make big decisions around the business.
As the old adage goes – to whom much is given, much is expected. An emphasis on stewardship responsibilities will help to ensure that the aspiration to pass the business will be achieved.