Many families create a family council to fulfill short-term goals, like developing policies and planning meetings. Once all of the policies are completed and the family gets acclimated to having annual meetings, it often seems like there isn’t much to do. I have spoken with several families who complete all of their policies and operate their council for 10 years or so, only to disband the family council because all of their work is done.
Don’t make this mistake. An active family council has many long-term benefits for both the family and the business.
Family councils can be extremely useful tools, but they need to be designed to meet both short and long-term needs.
- The scope of a family council should be to
- Increase the family’s capabilities as stewards of a company that is growing in complexity
- Build strong working relationships among family members
- Build a strong and diverse leadership team
- Develop a process to manage conflict and provide inclusive decision-making
- Increase the family’s knowledge and understanding of the market, business, and board activities
- Plan for succession and transition by ensuring role readiness with as many candidates as possible
- Build accountability measures for those seeking additional leadership roles
- Create a process to prepare and qualify family employees
- Ensure that the youngest generation’s experiences with to the family and business are exciting and positive
This may be a long and intimidating list, but there are ways to organize the work so that it doesn’t all fall on the shoulders of one individual. The first is to create a task force or work with the family council to develop a 10 year plan, also called a family strategy.
The 10 year plan should include:
- The growth of the company and family in both size and complexity
- The changes planned on the board
- Upcoming retirements, succession plans, and transitions
- A vision for the family
- Agreement that the family wants to remain family owned (or not), also called the mission
- A statement of shared values
- Objectives and strategies to live values and carry out vision
- Programs to implement objectives and strategiesFunding for programming, including education
- Development of any necessary processes or procedures to execute plan
- Development of a monitoring and reporting process
These steps comprise a full family strategy. There are two elements that need to be developed to support the family strategy. The first, also called the family constitution, consists of supporting policies and processes required to implement a plan. The second is the structure of the family council that’s necessary to implement the plan.
The family constitution is a tool to document everything that the family agrees on and should be used as a basis for making decisions and changes in the family.
As mentioned above, the family council’s purpose is to carry out the family strategy. It needs to be organized to help implement the overall objectives of the family. The family council should be organized so that the structure itself is helping the family meet their objectives. For example, if a family wants to create a deep bench of family leaders, the family council structure can include committees with a chair for each, creating opportunities for new leaders to gain experience. These committees can be responsible for a portion of the overall family strategy.
The family council should consider having a plan for each of the following areas:
- Development and Education
- Governance and Ownership
- Family Relationships
- Family Philanthropy
- Business and Finance
The family council can decide how best to structure the committees, if they are using them, or devise a way to track and implement a plan in each of these areas.
Far from being a static and repetitive process, the family council needs to evolve just as much as the board and management in order to keep pace with the business. This keeps the agendas fresh and the work of the council and committees fluid and exciting.