Family Business Governance: Boards & Family Councils

Overview

Communication that is respectful and collaborative are hallmarks of well-functioning Boards and Family Councils. In addition to providing an appropriate environment for communication, well-defined structures support clear and effective communication between the two structures as well.

Ensuring your independent directors and advisors share and embody the values of the business and family will reinforce a collaborative culture on your board. An important function of the Board is ensuring value creation for the company and its owners. The Board represents the ownership group, and as such wants to take direction from the owners and act in their best interest. The owners can provide clear direction to the Board by establishing their goals for business growth and use of capital.

The dialogue, both in the boardroom and the family council, is paramount. For the family, the sharing of ideas and resulting discussion are where the magic happens. Policies and decisions that the family makes in the family council are important, but they are the byproducts of the open sharing of ideas and sometimes iterative conversations that families engage in to arrive at a result that is embraced by all.

The family council is a great learning environment for family members of all ages. Senior family can share family and business legacy and history with the young family members. Everyone can learn about business in general in addition to learning about the family’s enterprise. This is especially important for family members not involved in daily operations or not serving on the board. The family council environment is a good place to begin conversations about philanthropy and the family’s place in the community. A robust family process not only supports a well-functioning family but leads to personal development as well.