Family Structures – Professionalising Business Families

Best Practice recommends creating family structures that are appropriate to the style, needs and resources of each individual family. The bodies that make up the family structure provide leadership and strategic decision-making on issues that affect the family, as a family.

We use separate structures in the family and in the business to raise a membrane between the two entities that can only be passed through in prescribed ways.  This enables the family to concentrate on family-related issues, and leaves the business free to focus on the business of being in business.

Family Structures - Professionalising Business Families 

Functional Separation in Family Structures

The functional separation of family from business decision-making is designed to enable the family to address its issues while the business addresses its own issues.  In many family businesses, some individuals have multiple roles:  one or more in the family and several in the business (eg: director, manager and operative).

With a proper structure in place it’s clear when they should be in business mode, and what mode that is, and when they should be in family mode. While personal interests and conflicts of interest can never be eliminated entirely from a family business environment, structures make it easier to identify, scope and address them with reasonable objectivity.

Major Functional Bodies

The three main family structure bodies are:

Family Council – appropriate for all families.  Handles: leadership and representation; decision making; family discipline.

Family Office – appropriate for families wishing to provide services and benefits to family members.  Acts as an executive service office for the family.  May be operated by one or more family members, on a paid or honorary basis, with support from professional advisers, or by professional advisers.

Family Forum – a gathering place for the whole family.  Used to communicate business results, engage the broader family in shared projects, and introduce younger family members into the family’s history, ethos and legacy.

Family Structure Activities

The Family Council, Family Office and Family Forum will be involved in some or all of the following activities, depending on where the family sits on the maturity scale:

  1. Define and support family values.
  2. Develop and support a family vision.
  3. Strategic and other major decision-making, for the family.
  4. Develop, implement and execute a Family Plan (strategy).
  5. Develop, implement and execute Family Action Plans.
  6. Family representation and constructive communications with the business board.
  7. Robust reviews of the family’s progress against agreed plans, including performance of individuals.
  8. Protect and manage family wealth.
  9. Protect and enhance the family’s legacy and reputation.
  10. Provision of professional services to the family – may be achieved through a Family Office.
  11. Family peacekeeping and peacemaking.
  12. Develop, implement and enforce a Family Constitution.
  13. Create and enforce a Code of Mutual Obligations for family members.
  14. Family support for family members (financial and other forms).
  15. Educating younger family members, and grooming potential family employees and future leaders.
  16. Succession and transition plans – performance reviews and progress against plans.

 

For hep to establish family business structures, please call, or contact: The Solutionist Group.

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