How To Set Up An Effective Family Council

When a family business starts out, family meetings may be as simple as Mom and Dad calling everyone together at the kitchen table. For any business that has survived the early entrepreneurial stage, however, a more formal approach is necessary. This guide offers some suggestions for planning and conducting effective family meetings.

The key to functioning effectively as a business and a family is good communication. Many families, however, fall into the trap of assuming that communication among family members is something that takes care of itself. Such families may try to talk business during a holiday get-together or tell themselves everything’s fine because “we see each other every day anyway.”

The first step to overcoming this common problem is recognizing that good communication takes work. In addition, business-owning families must embrace a governance structure that facilitates healthy, ongoing interaction. Dr. Dennis T. Jaffe, a professor at Saybrook Graduate School and co-author of “Working With the Ones You Love: Building A Successful Family Business,” recommends that families adopt a family council structure to formalize interpersonal communication. The council, which meets on a regular basis, consists of all adult members of the business-owning family, as well as their spouses. “The family council defines the core purpose and values for the business and family,” Jaffe says.

“In the family council, issues can be presented, information can be shared, misunderstandings can be cleared up, and private matters can be resolved without escalating them to involve the whole business.”

Kickoff Retreat
Plan the first council meeting as a multi-day kickoff retreat (preferably over a weekend), which can be combined with a vacation or special family event. Jaffe suggests families hire an outside facilitator to plan and conduct the meeting, especially if there is any apprehension about it or the family is facing any difficult issues likely to surface during the retreat.

The facilitator can help plan an agenda that will balance the need to cover business issues with times for fun and relaxation. In his consultations with business-owning families, Jaffe organizes retreat agendas using a five-phase structure:

1. Appreciating history,

2. Understanding the family and its uniqueness,

3. Defining the family’s mission and values,

4. Creating a shared vision,

5. Building understandings, agreements and structures.

The duration of each phase and related activities will vary depending on the family’s background and needs. Throughout, participants should keep in mind that the kickoff retreat is just the first of many family meetings. For that reason, they shouldn’t feel the need to rush in making decisions that may require further study and discussion. In fact, they may benefit significantly by agreeing to disagree on contentious issues and deferring discussion or decision-making on difficult issues.

Appreciating History
Phase one would begin with a discussion of the retreat’s purpose and ground rules, followed by a presentation of the family’s and business’s history. During this presentation, key events should be highlighted to help establish a context and recognize prior accomplishments.

Understanding the Family and Its Uniqueness. Participation of family members throughout the retreat is key, and it starts in phase two — understanding the family and its uniqueness. Individuals should be asked to share information about themselves, especially their personal needs and values. This phase also is an excellent time to welcome new family members and acknowledge the contributions of existing members.

Defining the Family’s Mission and Values
The individual statements from phase two form the basis for phase three when the participants begin defining the family’s mission and values as a prelude to writing a mission statement or other formal document spelling out its operating principles and code of conduct. Phase three can be structured as a discussion (or several small-group discussions) on major issues related to the family and the business. Discussion questions could include:

• What is our business, and how do we accomplish it?

• Why are we in business? Why do we want to remain in business?

• What are our core values for our family? Our business? What moral beliefs should guide our conduct?

• What do we stand for?

• What do we expect of each other in terms of behavior and participation?

• What is our philosophy as a family? What are our guiding principles for membership, employment, promotion and leadership?

Creating a Shared Vision
Phase four focuses on creating a shared vision. This is the time for participants to assess where they are now as a family and a business and then envision their future together. In addition to deciding their goals and visions for the future, they should list any obstacles that must be overcome to make those visions a reality.

Building Understanding, Agreements and Structures
The final phase involves building understandings, agreements and structures as needed by the family. For example, in the kickoff retreat, this phase would include a review of the family council structure, its role and a suggested schedule for future meetings. It also could cover management issues via a brainstorming session on ways to run the business more effectively and a discussion of the need for outside directors on the board.

Regular Family Meetings
After the kickoff retreat, the family can begin regular family council meetings to follow up on key issues. For example, the next meeting might continue the work they’ve begun on the mission statement. These sessions can last anywhere from two to four hours and can be led by family members unless there are highly emotional issues that must be addressed. The task of running the meetings should rotate among family members in order to help develop leadership skills.

The agendas for such meetings probably will differ markedly from that of the kickoff because they usually will be task-focused. As with any business meeting, they should address progress on tasks assigned at previous meetings and allow time for introduction of new issues.

Outside experts can be brought in as needed to assist with certain complex tasks and to help present data to the family council. For example, devising an effective compensation program will require the assistance of the family’s accountant and perhaps a management consultant, who should be invited to relevant family council meetings.

Annual or Semi-Annual Retreats
In addition to meeting on a regular basis, the family should plan an annual or semi-annual retreat that includes spouses and combines business with time for family fun. Retreats usually are held over a weekend at a resort or other comfortable gathering place. As with the kickoff retreat, families may want to enlist the aid of an outside facilitator to help plan the retreat agenda and to lead some or all of the sessions. In addition to helping the family address difficult issues, the facilitator can lend expertise in running education sessions, coaching during team-building exercises, and leading other personal and professional development activities.

Another opportunity offered by a retreat is holding concurrent education sessions for different family groups. For example, the facilitator could conduct a session for younger family members expected to grow into leadership roles while a senior family member runs a meeting for new members on the family’s and business’s history. At the same time, the management team could gather to review the year’s results and set strategy for the coming year.

A Family Council Is Worth the Effort
Launching a family council is an important undertaking that requires a significant time investment for retreats and regular meetings. Families that take this approach, however, will find that the results are well worth their time: a reliable structure for addressing family and business issues, improved communication among members, and a clearer sense of the family’s mission and values.

Please call us if you would like help in setting up a family business council, facilitating family business retreats or dealing with any other issues that may rise in your family business.