Here's What it Takes To Lead A Family Business
Leading a successful family business requires a clear understanding of conflict management (known as positive family relationships) and a clear understanding of business structures (known as governance).
First, positive family relationships do not occur by accident or by just thinking positive thoughts. Some debate whether positive relationships are the result of focusing on 'quality' vs. 'quantity' time spent. However, positive relationships require a T.I.P.; time, intentionality, and proximity. How do you do that?
- Commit the time to have family meals together.
- Commit to enjoy activities together as a family where business is not the main event.
- Commit to a family council that meets on a regular basis, giving all voices the opportunity to be heard.
- Commit to learning as a family how to have difficult conversations and still love each other.
- Commit to educating the next generation about the business, the governance, and what it takes to lead a family business.
- Commit to providing family grace and love.
Second, sound business structures are critical to profitably grow the business in an ever-changing competitive environment. In general, corporate governance is "the system of rules, practices, and processes by which a company is directed and controlled." For family businesses, governance should help formalize issues such as ownership, leadership structures, control, conflict resolution, and communication. For many families, the process of developing family governance can be as valuable and educational as the final product. What could that look like?
- Begin with agreement on how the family will communicate, debate, resolve conflict, and hold each other accountable.
- Create a family charter describing how the family will relate to each other and the business.
- Create (or update) a shareholder's agreement that includes, among other things, clearly defined governance structures.
- Process additional issues such as management of the business, compensation, training and development of family, and qualifications for leadership roles.
- Build meaningful experiential learning opportunities for family and non- family employees.
- Establish an Advisory Board to provide nonbiased counsel, advice, contacts, and strategy to help the family business achieve its goals.
Good governance and positive relationships require discipline to execute and hold each other accountable. It is not too late to get started.
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