Family Business Topics for your next family governance meeting.
Each business family has its own culture, strengths, idiosyncrasies, and shared history. That’s why each family must do its own work to develop specific policies and processes that stem from the foundation of their own family values.
These are a few of the topics to address at your next family meeting.
Trust, both within the family and between non-family leaders, increases the likelihood that business decisions will be made in the best interests of all shareholders. Trust will help you navigate rough waters as the arise.
Governance is hard work but necessary. Not many people are comfortable discussing tough topics, but these issues must be addressed at family meetings. If they aren’t, how will they be resolved? It is helpful to find a professional that can facilitate these conversations. If your family gatherings focus entirely on business and education, interest in attending will decline. Don’t forget to include some fun.
The process of working through issues is as important as the result. Merely sitting down together to discuss potential solutions is significant progress in itself. The shared experience of working together builds trust. Even if an issue is settled in a way that’s not to everyone’s liking, people will feel better about the result if they feel their voices were heard and the decision-making process was fair.
Values provide commonality. When disagreements bubble up in the future or questions arise about the right thing to do, reviewing the family values often provides clarity. Some families begin every family meeting by reviewing their family values.
Legacy Stories that education family members about the family’s business legacy are a must. Educated family members become committed stewards of the family enterprise. The Legacy Story should be developed for children of all ages, young adults, and adults, as well as married-ins or significant others, and include a history of the family in business, the family values, philanthropy, and information related to the family business and its industry. Educational programming has another benefit, too — it brings cousins together in a business context.
Succession planning should be an obvious necessity, but many family businesses neglect it. A succession plan should be documented, including a timeframe for developing the future leader and an emergency plan in case disaster strikes before the successor is ready. It’s important for the plan to be communicated in advance to the family and other key stakeholders. Multiple studies have found a significant percentage of family businesses do not have a formal plan. Succession is a process, not a destination, so ample time must be set aside to create a plan. Succession planning should involve an assessment of future needs, not a search for someone whose strengths mirror those of the current leader.
An independent board with the right members is an important asset to a family business. Independent members of a company’s board of directors or board of advisers bring an objective, outside perspective and proven business experience to a family enterprise. They can take the helm in family compensation decisions, assure the family that management is being held accountable, and provide crucial feedback on strategy. The most effective independent board members are truly independent, not the CEO’s cronies or people who provide professional services to the company. They should have the right skills to provide strategic oversight and help the family business reach the next level of growth. And, importantly, they must understand and fit in with the family values and culture.
A consultant is able to create an atmosphere where all family members feel comfortable speaking about difficult issues. Find one who can relate well to all members of the family, regardless of age, gender, marital status, etc.
Lovelynn Ivey Consulting can help. Click here.
