Tuesday, September 6, 2016
For a Business Family there is usually a Board of Directors to help guide and oversee the growth of the Business. As the Family continues to grow through Next Gen Births and by marriage and as the Family works to ‘pass-the-baton’, what mechanisms are in place to help guide and oversee the growth of the Family that own the Business?
One Solution: a Family Council. A Family Council is a group selected by the family-owners to, among other things, identify and pursue the family’s goals; represent the family to management and the Board of Directors; and oversee the family-owners’ goals and objectives over the year.
How does a Family Council work? There is no “one-size-fits-all” template. In fact, an effective Family Council is one that is designed for the specific needs and desires of the family that it serves. Certain steps can help guide the process of organizing a Family Council. First, the family should develop a Family Charter. The Family Charter defines the vision and purpose for the Family Council, and it serves as the foundational document to guide the Family Council. The Family Charter also defines the core values to be communicated to the next generation. The size of the Family Council should be determined by the size, needs, and focus of the family.
Following the decision of the basic structure, governance and goals of the Family Council, the Family Council should also agree on the Meeting Ground Rules and Family Code of Conduct.
A properly structured and implemented Family Council will help minimize ‘misaligned expectations’ and provide another avenue to enhance Family Communication. Discussions within the Family Council can help clarify the Boundaries between the Family and the Business, a safe environment to discuss Family Employment policies, In-Law participation, Business Leadership expectations, Conflict of Interest policies, Shareholders Agreements, just to name a few. While this may first appear to be rigid and formal, as in any Family gathering-having fun is a prerequisite.
Your family’s legacy is too important to expect it to ‘just happen’. It is important to understand what questions to ask, appreciate the sensitivity of the issues and conversations, develop the ability to communicate with those impacted, and support more satisfied lives. To lose family harmony due to a lack of understanding does not help build a family legacy. A legacy of love, harmony, security, and business success is the ultimate goal. As your business family focuses on the development of the family and the business, you need not travel this journey alone.