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December 2021 < Back

Family Council in Family Business

A Family Council is an important decision-making forum that helps enterprising families achieve their mission and important goals by way of these activities:

Create compelling family values, mission, and vision statements, which clarify the family’s important principles, purpose, direction, and key objectives. These statements help the family become more aware and aligned about how it will support the family enterprise and have a positive impact on society.

Help develop family member talent into family enterprise roles where they can meaningfully engage with important activities and assets, and best contribute to the success of the family and enterprise.

Grow family unity and commitment to one another, to the enterprise, and to the mission of the family. This is done by facilitating communication and information sharing; organizing gatherings, shared experiences, formal meetings of the family; teaching the family members about their shared history and common legacy; and building a sense of adventure about what the family is doing together.

Build family discipline through guidelines, policies, agreements, and decision-making processes that lead to long-term family and enterprise success.

The Composition of Family Council (FC)

The family council can be composed in several ways, the common approach being - one member elected per family branch. The family council should try to have adequate representation of all generations, both genders, in-laws, active and passive owners, hometown and geographically distant relatives. The family council typically meets a few times each year for one or two days each time.

FC Charter

A Family Council that meets but is not clear on its purpose or areas of responsibilities is likely to frustrate both council members and the broader family. An effective Family Council has a charter that defines its purpose, roles, responsibilities and high-level goals. In many ways the charter serves as an operating manual for the Family Council.

Many councils have meetings by phone or online conferencing, and others in person. Other councils meet when issues or projects are pending. Larger councils delegate committees or task forces, which may include family members outside the council. For example, there may be committees focusing on philanthropy, next-generation education, planning the family assembly or managing family vacation properties.

Outcomes of Family Council

The effectiveness of a Family Council can be visible through concrete milestones, some examples being:

  • Code of conduct and conflict resolution procedures and policies
  • Family employment policy recommendations
  • Philanthropy philosophy and guidelines for collaborative grants
  • Results of assessment on the need for a Family Foundation or Family Office
  • Shareholder education and development programs
  • Education curricula for all age groups across the family

Besides these, there are softer benefits (hard to measure) that are important contributions of the Family Council like - building trust, strengthening relationships, sustaining family unity, aligning the family with the business strategy and developing a shared family commitment.

The Family Council Chair

An effective FC Chair is one who can take an all-family perspective when influencing the Council, and is able to lead with a vision and through obstacles that might stand in the way. A critical skill is the ability to act in the best interest of the overall family without showing bias towards any one particular branch. Most certainly the Chair needs to be organized and know how to lead others who are typically volunteers.

Some families will use the “Chair” position as a method of developing leadership skills among family members. This can work, but in order for the Chair to be successful, resources (such as family advisors, training seminars or administrative support) may need to be brought in to help organize and implement family initiatives. Similarly, an inexperienced Chair will benefit from coaching to strengthen his or her leadership abilities.

In conclusion, when Family Councils are formed and maintained well they can serve as effective vehicles for family governance, decision-making and communication. They require the right leadership and members who are committed to the goals and process laid out.

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PFBI Connect is conceptualised, designed, edited and published by PFBI. All the articles and news are researched, selected and suitably edited at the discretion of the editorial team. All rights reserved. Information and data featured in PFBI Connect cannot be printed or reproduced without prior approval.

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