Family Business Best Practice – A Magic Toolbox?

What is Family Business “Best Practice”?

One of the primary goals of any family business adviser is to increase the effectiveness and success of Australian families in business – helping them attain greater peace and prosperity.

Such an outcome suggests that a family has achieved a level of excellence, or “best practice”, but here’s the rub: families and businesses actually come from different worlds:

  • Families are characterised by love and nurture, compassion, loyalty and equality.
  • Business involves competition, profit, efficiency, risk and reward.

If you’re crazy enough to bring these opposites together in a family business, is there any hope of achieving overall best practice outcomes?  And even if you think you can do something useful, what would the beast look like, and how should it behave?

If we only think in terms of outcomes, the formula could be quite simple:

Best Practice = Happy Family + Strong Business.

But, to consistently be able to deliver this result requires the guidance of a tried and tested model process.  Given the profound differences between one family and the next, any such model must be a paragon of flexibility.

In search of a Best Practice Model

Because every family business has its own unique character and challenges – there never will be an off-the-shelf, one-size-fits-all, prescriptive suite of best practice solutions … beware anybody who suggests otherwise!  Accordingly, advisers need a flexible process model capable of delivering optimal outcomes for most families, under most circumstances.

Combining advisers’ experiences of working with real family businesses with the wisdoms of academics and researchers leads to the conclusion that the bio-diversity implicit in family business requires tools, rather than rules to achieve best practice results.

These tools need to be wielded by trusted advisers sensitive to, and able to work collaboratively and constructively with family dynamics.

Although each family’s circumstances are unique, their issues are remarkably similar.  The parallels help us capture and transfer learnings from one situation to another – the essence of best practice.

Towards a Best Practice Model

The family and the business need to be able to operate professionally in their dealings with al  stakeholders – and each other.  This is a key best practice outcome.

This produced the “3 Cs” of family business:

  • Clarity – what are we doing and why are we doing it?
  • Certainty – how and when are we doing it?
  • Commitment – who’s responsible for doing what we’ve agreed to do to achieve Clarity and Certainty?

In business this equates to accepted commercial fundamentals, supported by appropriate levels of detail, depending on the business:

  • Strategy Plans: corporate mission and goals; revenue and profit targets; organizational structure (boards, management teams, decision making and reporting lines); marketing plans …
  • Business Plans: management budgets, cashflows, finance, facilities, IT, capex, distribution, HR, risk management …
  • Operational Plans: action plans; timelines; responsibilities and accountabilities; operating budgets; business continuity …
  • Delivery – actually “doing” the business!


Families need the same things, appropriately converted for family consumption, at levels that suit the individual family:

  • Values and Visioning: who we are as a family, what we believe in, individual and collective goals …
  • Strategy Plans: where we’re going, as individuals and as a family, and why we want to get there …
  • Family Plans: how to achieve our goals; individual and collective commitments and responsibilities; timelines; wills and estate planning; financial and retirement plans…
  • Structures: Family Boards and Councils; Family Forums and other communication processes.
  • Family Agreements: Codes of Conduct; Family Constitutions; Shareholder Agreements; Leadership Transition and Succession Plans …

Putting it Together

As the advisers’ knowledge and experience grew they became increasingly confident about their process choices, which then formed the blueprint currently being considered for adoption as FBA’s best practice model.

Details of actual process steps will appear in the next two issues of “Generations” Magazine.  The process starts by separating and disentangling the family from the business, both structurally and functionally, to provide a foundation for objective situation analysis, program planning and decision making, for both entities.  Specific issues, such as family conflict, are addressed and resolved (or at least neutralised) to avoid later derailing the process.

The process proceeds on parallel tracks – one for family and individual issues, the other for business issues.  The tracks are reunited, with clear rules of engagement, later in the process.

The process is approached as a family journey, with the journey being more important than the destination.  It’s planned in advance as a series of manageable, sequential stages, with subsequent stages being heavily influenced by what came before.  Pragmatism and flexibility are built in, as diversions and surprises are not uncommon!

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