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How families plan for the business

Sunday, February 23, 2014
Business Eye

A family council is the organisation and strategic planning arm of a family, where all members meet and decide values, policy and direction for the future. 


At its core, the council is the vehicle to address and explore family concerns that influence the business and the family. It also defines, clarifies, and expresses the family’s deepest values, meaning, mission and legacy.


By forming a council, a family realises that it is a large, important institution, whose decisions and activities influence not only its immediate members, but also the employees and the community.


It is imperative to understand and acknowledge that family businesses create too many complex issues for the family to leave them to random gatherings or to the will of one person.


Many disputes that seem like pure business issues can only be resolved by the family. Investing in new plant and equipment, promoting a non-family member to CEO, selling or splitting the business, all relate to family interests. This is because, while the situation occurs within the business, it concerns issues that have to do with the family’s connection to the business. 


Without a family council, this process goes on informally and secretly in most family businesses. The family council makes these decisions open and explicit. 


On most occasions, many families mistakenly feel that the best way to promote harmony is to avoid discussion of upsetting topics: if a son, (called Bill) is feeling upset because Dad favours another son (called Joey), the best way to deal with the situation is to ignore it. But in reality, if it is not discussed, Billy and Joey only get more estranged, while Dad remains ignorant of the unintended rivalry.


A family council is the most effective forum to discuss such hurts. Very few issues get resolved by ignoring them. 


The council is also an acknowledgement that old-fashioned patriarchy is no longer applicable. The father can no longer unilaterally decide everything of importance for the family. The eldest son does not always inherit the business, and values, concerns and conflicts among family members cannot always be anticipated and mediated by the caring autocracy of the founder-patriarch. 


A council recognises that more participation, openness, information sharing, debate and democracy are needed in today’s complex family environment. In other words, the founder has to find out what people want.


Without active commitment and involvement of all family members, the founder may risk deeply hurting feelings or even miscommunication. Even though Dad may remain as head of the family, and make the final decisions in some areas, increasingly families need to get everyone together to share information, feelings and goals.


The business is the engine that serves the deeper needs of the whole family. The business often expresses the personal entrepreneurial dream of the founder or the founding couple. A founder creates a business not simply to make money, but as a form of social expression about something he or she believes in. And they are extremely passionate about this. 


The business grows not just in size, but to a fuller or lesser expression of an idea. This is why a family conflict about the future of a company, or between the married couple, who founded it, is so difficult to resolve. The debate among the owners is not about power or profits, but about the soul and the meaning of the company. When that dream passes to others—professional managers, heirs, or even public shareholders—will it continue to hold the original founder’s vision? Only time will tell. 


A founder’s vision is only one of the stories contained in the family business. The business is also about the family’s development, struggles and successes. It is where the children help out after school, and what the family is known for. It is where sons and daughters dream of working, something that everyone in the family is often excited about. 


The business can be so much a part of the meaning of the family that all family members need to explore how the business is working for them. As part of the family, even though not part of the management of the business, they have strong opinions and exert influence. Usually they do it indirectly, to spouses in the business or through others. In a family council, this influence comes out in the open. 


Jai Leladharsingh is the assistant manager, workforce development and business process, with the Coosal’s Group of Companies. His e-mail is [email protected].


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