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 FAMILY COUNCIL

Open communication and understanding the family values, goals and vision of your family are very important factors that will contribute greatly to your family business's success.

Many family businesses lack commitment to structure and don’t understand the importance of a Family Council which could be compared to the role that a board plays in a business. They fail to create an organisation plan and fail to deal with conflicts that arise among family members that are actively involved in working for the business. Additionally, family members involved in running a business together sometimes experience friction when attempting to agree on how the family business should be directed.

One of the greatest mechanisms that fosters communication, structure, and planning is the development of a Family Council. The members of a Family Council serve as an effective communication link between the family and board of directors, assuring that directors understand family objectives and that the family understand the extent to which family objectives are achieved. It is also responsible for discussing the dynamic that exists within the business and making decisions on how to handle issues that arise among family members who are involved in the day-to-day operations of the business.

RESOLVING CONFLICT IS A GOAL OF FAMILY BUSINESS COUNCIL

It’s often easier for a family to sweep conflict under the carpet rather than address it. But disagreements that are not handled swiftly and correctly can eventually lead to larger problems. The Family Council is invaluable in resolving conflict and opening up meaningful channels of communication by delineating the boundary between the family and the family business. The Family Council should however not be used to make business decisions or discuss management issues and is responsible to assist the family business in resolving conflicts and planning for a successful future.

WHO IS APPOINTED AS A MEMBER OF FAMILY COUNCIL?

In most cases, the most logical members of a Family Council are family members that have an interest in the business but do not work directly for the business. This allows the council to adopt an objective perspective, while avoiding becoming embroiled in business or management issues. While there may be a desire to have a large council, a small group is often a better choice, especially when families are prone to conflict.

WHAT'S IN THE BEST INTEREST OF THE FAMILY & THE BUSINESS?

The concept of a Family Council may at first appear to be remote, however as the family business professionalises it should become more familiar to the family members and a key structure in its culture and modus operandi. Not all family businesses understand the importance of a Family Council, and therefore they neglect to develop one. Time is required for the family to develop openness and to share 'sensitive' personal information. If your family business requires guidance and direction with conflict resolution, having a Family Council might be an excellent solution.