Family Councils and Family Meetings

Family Councils are regular, structured forums (meetings) of family members who are involved in, or have an interest in, a family business.  They are conducted as retreats to help families maintain a reasonable level of communication amongst themselves over important issues that affect them and their family business.

Family Councils, when used in conjunction with Family Constitutions, provide a relatively painless and constructive way of converting family business Dictators into family business Leaders.

Look at it this way: if a business needs governance while a family needs love, leadership and harmony, it follows that collectively they need some sort of meeting ground, with an agenda, rules and procedures, to help guide and support the family in its dealings with and relationship to the business.

Family Council Objectives

To provide a forum for discussing and resolving important family issues, including:

• Leadership of the business and the family.
• Managing and maintaining communications between family members, including maintaining mutual respect and shared visions.
• Business continuity, including buy / sell / merge / alliance decisions.
• Maintaining and evolving family business values and goals.
• Managing change including technology, business processes and risk.
• Preparation for retirement and succession, including encouraging, informing and training next generation family members.
• Hiring, career development and promotion (or otherwise) for family members.
• Counselling, training, re-training, positioning and firing family members.
• Responsibilities and privileges, recognition of different needs and circumstances, remuneration, terms and conditions for working members.
• Responsibilities and privileges, recognition of different needs and distributions to non-working members.

Family Council Process

Most families use an independent facilitator to establish, develop and manage the meeting process – at least at first.  Meetings are usually conducted away from the business.  The first may take a full day, or more.  Subsequent meetings may be shorter.

Stage 1 - Recognition and acknowledgement:

1. The head of the business has done a terrific job to date, but they can’t keep going forever.
2. The business needs to corporatise its operations, for various reasons, while maintaining its quintessential nature and values as a family business.
3. There are family members ready, willing and able to take on more responsibility in the business.
4. There are family members with little or no interest in having an active involvement in the operations of the business.
5. Every family member, including non-workers and non-working spouses, have a legitimate interest in the business, its present and its future. Their needs and aspirations should be acknowledged.
6. There were many good reasons for nurturing the business to its current state.  The family now needs to agree where it is going to in the future.

Stage 2 – Setting meeting, parameter and process rules:

1. Meetings should be firmly and benevolently chaired and/or facilitated.
2. Everybody attends the meeting as a participant.  There is no general power of veto and everybody is encouraged to speak their mind, without fear of reprisals or embarrassment.
3. Meetings should follow an agenda and keep to an agreed timeframe.
4. Every issue or grievance is legitimate and is worthy of the family’s attention.  They should be aired and dealt with promptly, empathetically and practically.
5. Every family member has a voice at the forum and is entitled to place items on the agenda.
6. Meetings are designed to inform and educate, to encourage debate, generate options, develop consensus and achieve closure on a wide range of family and business issues.

Stage 3 – Establish a standard agenda to cover all essential issues, with an associated time allocation for each item. A typical agenda will contain the following discussion topics:

1. The family’s goals and aspirations for the business – short, medium and long term – including values, investment, independence etc.
2. Required balance between business and family – professionalism vs. protectionism. Includes performance reviews and actions.
3. Required levels of skill and contribution from family members.
4. Non-family managers.
5. Independent boards of directors and advisers.
6. Succession issues – including who, when and how? Includes preparation (“grooming”) strategies and retirement / semi-retirement strategies.
7. Rewards for family members in and out of the business.
8. Mutual responsibilities.

Benefits of Family Councils

There are few things more likely to generate dissent in family ranks than overt disempowerment and lack of communication.  Family Councils help to avoid this situation by ensuring that family members have a regular opportunity to hear and to be heard about all matters affecting the family business.