Family business governance: the backbone of sustainable growth

Family businesses are crucial to Aotearoa New Zealand’s economy, shaping communities and building legacies that span generations. 

In a world of accelerating change and rising expectations, how family businesses grow matters more than ever, and having good governance within these businesses is essential to achieving long-term, sustainable growth. 

Governance in family businesses is about much more than ticking boxes. It provides structure and process in a highly complicated environment that is often clouded in emotion. 

The 2025 KPMG Family Business Report found that 69% of New Zealand’s highest-performing family businesses have formal governance structures in place – compared with 67% globally.

Although there is a preference for formal boards, depending on business’s stage and size, a formal board may not be feasible. In these cases, setting up an advisory board is an option to start small and grow, or evolve into a more formal board as required. 

To gain a strategic advantage, investing in independent perspectives in governance roles supports more structured and effective communication, especially during times of transition or strategic planning. 

The role of the board in family business 

In a family business, a well-functioning board plays a crucial role in holding family member managers accountable, helping to separate family relationships from business decisions.

By providing independent oversight, the board ensures the business stays focused on its long-term strategic objectives, even when personal dynamics or generational transitions might otherwise complicate decision-making.

Despite their close-knit nature, 38% of New Zealand family businesses report dissatisfaction with communication within the family. Strong relationships, trust and a commitment to resolving conflict are foundational to long-term success.

As businesses transition across generations, fostering collaboration and clarity becomes even more critical. Hence, the role of the board in a family business becomes particularly important as they support this transition.

The developing role of governance to support the Family Office

One of the most striking shifts in recent years is the evolution from ’family businesses’ to ’business families’ reflecting a broader investment mindset, where families diversify beyond their core enterprises and embrace new avenues for growth.

As family businesses grow, many choose to set up Family Offices to oversee their wealth, investments and succession planning. There is a clear trend towards increased professionalisation in Family Offices, with more formal governance structures, clearer reporting lines, and well-defined roles emerging.

This is where the importance of governance cannot be underestimated. In addition, the lack of succession planning in many Family Offices exposes them to leadership and continuity risks, which could be mitigated through a structured approach.

Successful Family Offices are characterised by their agility, innovation and deep commitment to intergenerational legacy. A Family Office requires a distinct skill set and a subtle cultural fit, unlike any other industry.

It’s common for Family Offices to experience overlap between personal and business matters. In these situations, governance plays a crucial role in clarifying boundaries and bringing greater distinction between the two.

Practical tips and insights from the IoD and KPMG Family Business event:

During a recent IoD and KPMG Family Business event in Hamilton, there was a robust conversation about the role of governance in family businesses. Key takeaways included: 

• Governance in family businesses differs from corporates in its need to balance family dynamics with commercial imperatives
• Boards and advisors play an important role in helping families navigate leadership, succession and strategy
• Bringing in non-family board members and external advisors helps manage conflict, ensures objectivity and supports better decision-making. Often, the first step to achieving this is creating a safe space for all family members to voice their opinions and work towards a shared vision. 
  Boards play a vital role in succession planning, helping families prepare for leadership transitions and ensuring continuity
  Having the right documentation, processes and structures in place is key to supporting the success of family businesses
  As family businesses grow and transition, governance structures must remain relevant. Regular reviews and updates are essential to ensure the board’s composition and skill set match the business’s needs
   

Conclusion

Governance in family business is not a one-size-fits-all approach. It is a dynamic process that must evolve as the business transitions through generations. 

By embracing formal governance structures, fostering diversity, investing in communication and succession planning, New Zealand’s family businesses can build stronger legacies.

Explore our latest reports:

Global family business report 2025 - KPMG New Zealand 

Global Family Office Compensation Benchmark Report - KPMG New Zealand 

KPMG’s advisors walk alongside New Zealand family businesses, helping them stay true to their values while planning for a future that’s both resilient and rewarding. If you’re thinking about your next steps, or would like further information about these reports, contact  jmfletcher@kpmg.co.nz or dhussey@kpmg.co.nz.