Family council: preventative medicine or surgical intervention?

If we were to apply medical terminology to the realm of family-owned firms, our first observation would be that all families run the risk of contracting “diseases” and sustaining “injuries.” When the family also owns a business, however, these risks are substantially higher. No business family is “immune” to these risks, which when left unchecked, can lead to far more serious conditions and even prove fatal for the firm’s continuity.

Who should address and manage these potential risks? The most appropriate forum is undoubtedly the family council, whose objectives include the development of a solid “prevention plan” to protect both the company and the owning family.

And here it’s important to avoid the trap of deciding which – the family or the company – should take precedence in the event of a problem. There is no need for a “clinical triage” to decide who comes first. Rather, firms should explore possibilities and aim for win-win solutions that strengthen the family unit while ensuring the firm’s long-term continuity.

“The family council plays a critical role in developing a solid ‘prevention plan’ that protects both the company and owner family.”

These realms complement each other yet follow different rules. Organizing and running a family as a company – and vice versa – is a mistake. That said, some overlap is inevitable, which is where the family council comes in.

The family council leads the “prevention plan” by keeping a close watch on the “unique needs and circumstances” of each family member and taking steps to avoid conflicts that could harm the wellbeing of either the individual or the company. To this end, “preventative measures” must be in place to safeguard family harmony and corporate meritocracy.

The role of family councils in this endeavor should be proactive by promoting initiatives that enhance communication, respect and trust among family members. As company leaders,  their happiness, well-being, commitment and passion for the company all contribute to its long-term success.

But in the real world, this is often easier said than done. Conflicting viewpoints and interests are inescapable in the intersecting spheres of family and business, which is why family councils are so vital by offering a forum to express, share and manage them.

And now for some good news:

  • First, no novel or rare “pathologies” have emerged in the realm of family businesses in recent times, although in the context of the current pandemic, we should add the caveat of “so far”!
  • Second, with early detection and ongoing monitoring, these “classic pathologies” have a good prognosis.
  • Third, even in the case of “complex conditions,” there are treatments available to “mitigate their symptoms” and “cure” them.

The most common pathologies

My years in the “operating room” of family businesses leave little room for doubt: conflicts always stem from the same roots: power, money and roles within the company. Successfully navigating these conflicts requires solid values and clearly defined limits; in the absence of this foundation, family firms are far more prone to “epidemic outbreaks” of discord within the family and business. If not treated, these situations can trigger “health emergencies” that, in a worst-case scenario, are battled out in the courtroom.

There are also owner families that suffer from unrest yet carry on for years as “asymptomatic.” In these cases, family councils serve as “preventative medicine” by “cleaning up past wounds” of grudges and hidden grievances so they don’t impact future generations.

Family councils also have several “vaccines” in their medicine cabinet:

1 – A people-centered approach that protects and promotes the welfare of all family members.

2 – Robust norms and forms to promote family harmony and help them build a united front.

3 – Strong commitment to the company’s future built on trust, communication and transparency.

One final piece of “medical advice”: let’s allow the family council to don their “medical gowns” as soon as possible to prevent “health crises” and potential “pathogens” from affecting family-owned firms and help them reach an optimal state of health.

 

 

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