Top 10 Reasons to Create a Family Council For Your Family-Owned Business
By Nancy Grengs, Family Business Coach and Consultant
All businesses have communication problems and conflicts. And, in family-owned businesses communications can be especially challenging. The ideal forum for conversations that create shared understanding and enable bottom-line results is the Family Council. A Family Council consists of family members that are:
- Owners of the business
- Immediate family members of business owners and their heirs
- Employed by the business
- Spouses of non-ownership family members working in the business and
- As a rule of thumb, 16 years or older.
Below are 10 reasons to create your Family Council.
1. Establish shared values, vision and mission for the family.
Get agreement on values that all family members share. Then, decide what the family would like the business to be now and in 10 or 20 years.
2. Bring the decision making process into the open.
When decisions are to be made, the Family Council can discuss the issue, clearly define an outcome and obtain consensus. This results in fewer misguided assumptions, better communication and family alignment.
3. Everyone hears the same thing at the same time.
When people share information they often add their opinions and embellishments to the topic or go to another family member outside the business to discuss their concerns. This creates complex three-way relationships. Hearing what is happening first hand and being able to discuss concerns openly creates a healthy environment for discussion and helps prevent divisive actions.
4. Establish the guidelines and expectations for family members in the business.
Clarify the ascension plan. Will family position such as eldest son be the determining factor or will leadership be dependent on skills and business acumen? Agree on how an heir will be groomed and selected. If there are several members interested in participating in the family business, establish criteria for who will have the opportunity to try out for the main leadership position and who will not.
5. Get agreement on how the family will use its wealth.
Obtain agreement on how and when the family will share wealth with family members, community and/or charity. Gain a common understanding on how this will influence the future of the business.
6. Provide support for the business's strategic planning process.
As much as one might want to separate the family from the business the systems are entwined. The family must support the business for it to prosper and in turn the business will support the family. The family's plan influences the business plan and visa versa.
7. Avoid huge conflicts due to lack of or poor communication.
When everything is going along well and all parties are happy, it is so much easier to discuss potentially sensitive issues than once there is a disagreement and emotions get involved. Make decisions early before problems can brew.
8. Learn about the desires and dreams of each family member.
Ask and learn the aspirations each family member has for their work and personal life. Are family members working in the family-business because they love it? Or, are they there because they feel a sense of obligation to the family and don't want to hurt anyone's feelings? Ask and you just might be surprised by what you learn about your family.
9. Keep the family informed about the business.
Share with family members what significant things are happening in the business. Help them understand the business plan and what business processes, decisions and forces are in motion so that they can better support the business.
10. Honor the business founders.
Share and learn the vision of the founding family member(s), where they got the money to get started and what struggles they had along the way.
Do you have skills leading teams and managing group dynamics? Can you listen even when you're told something you don't want to hear? If not, work with a family business professional to create and facilitate your Family Council.
About the Author
Nancy Grengs, family business coach and consultant works with family business owners to create long-term prosperity and peace of mind. To learn more about her and sign-up for more free tips like these, visit her site at www.grengs.com, call her at 360.944.3094, or email her at nancy@grengs.com. Top 10 Reasons to Create a Family Council for Your Family-Owned Business copyright © 2003 Grengs & Associates. All rights reserved.
Note: You are welcome to "reprint" this article online as long as it remains complete and unaltered (including the "about the author" info at the end), and you send a copy of your reprint to nancy@grengs.com
