Business owning families find it useful to have structures for the governance of the family as a means of providing the education and communication necessary to create good stewards of the family business. This is not a founder's priority but it is a cousin consortium necessity. In some family owning businesses, family structure begins in the sibling group by organizing the spouses of the siblings to provide a means of keeping the spouses informed and constructively involved.
The structure used is a family council. This council serves many purposes but at its core it is a means and method of informing family stakeholders about markets, finances, threats and opportunities of and to the family business. It is also the means and method by which the board of directors of the family business is informed about the needs and concerns of the family stakeholders.
The family council in smaller families may include all stakeholders; in medium sized families it may include most of the adult stakeholders; and, in larger families appointed or elected represent ives. These councils frequently are called upon to receive and disseminate the news and views of the company including its financial health or threats to its markets.
The council will develop the family's mission statement and organize the family meetings (discussed in another post). The Chair of the Board of Directors over on company side may call upon the council to develop an employment policy for how family members gain employment in the family business. Or, the Council may be called upon to identify the criteria for hiring a new CEO for the company.
Conflicts in any business are inevitable. In family business, it is no different within family business. These conflicts have the potential of threatening the very existence of the business. Before the threat is real, the council serves an important role of resolving these conflicts to the benefit of the family and the business.
It is not an understatement to say that the family council serves a vital role in the health and well-being of family owning businesses and the businesses they own.