ISSUE 3 MARCH 2008

First a definition. A ‘family council’ is a more-or-less formal meeting of family members. Unlike informal gatherings there is usually an agenda and perhaps a non-family chair person. The council may deal with issues like:

• the family’s vision for itself and its business;
• making sure that the family speaks with one voice to non-family managers;
• conflict resolution between family members;
• education for the Next Generation.

To see the value of family councils, here are representative views written as if by four people within a family. The family has just started to have formal councils on one afternoon every three months, followed by a family dinner. Each view reflects a potential benefit of a family council.

The Father
‘Long after I’m gone, I want our business to continue to improve the quality of life for my children and grandchildren. I am in favour of any structure that brings the family together and help them understand the privileges and responsibilities of ownership.

‘But in practice, until last year, I was too busy with the business to organise councils. Finally I admitted to myself that I was getting older and it was a priority to set up a family council. I see it as a valuable way to prepare the family for a new stage when I am gone.’

Family Councils can help resolve conflicts that no-one was talking about.

The Son
‘When we first talked about a family council I thought, to be honest, that it would be a waste of time. My father owns 80 per cent of the shares so whatever he decides, goes. But at our first formal meeting my father said that he wanted each of us to have an equal say because it was a family council not a business council, and he doesn’t own 80 per cent of the family. So in fact I have felt that it is worth my while to speak up.

‘Some of the things on the agenda have been very revealing. We have talked about issues that I didn’t even know were issues. For example I think my sister now understands my approach to the business, which I’d never even thought of explaining to her.’

The Daughter
‘For years I’ve felt that my brother was my parents’ favourite and it was unfair that he was made a senior executive even though he does not work the long hours that I do. But I never said anything because our family usually avoids any suggestion of open conflict.

‘The first family council was the first time that I felt that I could bring up the issue. Once it was on the agenda we felt we could talk openly. My brother explained that he believed he deserved his job because of his business results, which I have to admit have been excellent. He said that it’s not his style to work long hours in the office but he is still 100 per cent committed to the business. I accept what he says and I now see things in a different way.’

The Mother
‘Every Sunday I try to bring the family together for lunch and I so much want us just to talk normally and enjoy being together. But time after time we just talk about business, business, business. It has been hard for me to see family closeness being forced into second place compared to the business.

‘The family council gave me, for the first time, an easy way to insist that business issues were put aside for a while. Now I can say, ‘If you want to talk about that issue then put it on the agenda for the family council but let’s please not talk about it over our Sunday lunch.’

This illustration deals with a simple type of family council in a small family. Future articles will look at family councils in more depth - including how they can fit into complex governance arrangements for larger families and businesses.

In this issue

Are you ready?
Score your readiness to pass the business to the next generation

Family Offices
Options for preserving wealth

Why join the family business?
Three views on the reason for joining the family business

Desire for Dynasty
The story of the House of Morgan

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