Continuing our look at Family Governance, in this episode I discuss the Family Assembly, or Retreat / meeting.
I cover what they are, who attends them and what subjects are covered, along with some hints and tips as to how to get your own family meetings up and running.
We also look at the interaction between a family assembly, a family council and the family charter and provide a reminder of the key benefits of family governance.
If you are looking for help with the introduction of family governance, including a family assembly, please feel free to contact me email@example.com and we can arrange a Zoom call to discuss where to start.
Transcipt of this weeks show:
Hello and welcome to this weeks show, I hope that you have had a good week.
We are continuing our look at governance and in particular family governance. We have already covered what it is and how it is useful in episode 1 of this series, and we have also covered what a family charter / constitution is, what a family council is and today we will be looking at what a family assembly is.
Before we get in to that though I think it is worth recapping some of what we have already covered as we can now look at how all of that interacts with each other, the business and the business owning family.
Firstly, we know that family owned businesses are more complex than their non-family owned counterparts, there are three ‘systems’ at play. The ownership system, the management system and the family system.
Out of all of those the family system is the one most likely to be impacted by the introduction of family governance and these tools or processes that we have been talking about are designed to help enhance the relationship between the business owning family and the business.
The family charter or constitution is a document that outlines the values and vision of the business owning family, it is your opportunity to commit to what you see as the purpose of the business, and can also contain your views on who can own or work within the business.
The value however, isn’t necessarily in the charter itself, but much more in the discussions that lead to the Charter.
A recent report in the Family Firms Institute Practitioner publication re-iterates what I have been banging on about in that the document itself is the tip of the iceberg. It advises against using ‘off the shelf’ solutions and ‘copy and paste’ exercises.
The value here is in the process of putting a family charter in place. To a certain extent putting a family charter in place is easy, you can get a template from somewhere, chuck a few buzz words in there, sign it and put it in a drawer.
But that kind of misses the point, the purpose of the charter is for it to be a living document that the family embrace and unite behind. Ensuring the process is followed, and followed in a genuine way can be tricky. That’s part of the reason we suggest these processes are facilitated and we can help with that, but also for them to be effective once the process has finished it should be something that everyone has contributed to. Imagine just being presented with a document, and told to sign it and live up to its contents, without having any input to creating it, you would ‘t do it. So that is why the process is so important and why the benefits of doing it well are so much more than just paying lip service to it.
Family Charters are the starting point for good family governance and are a good idea for all family businesses.
As businesses grow and complexity increases it is then sensible to introduce a family council. They gather the views and opinions of family members, be that owners or otherwise and create a communication bridge with the board within the business itself. They help to ensure cohesion between the business owning family and the business itself.
Again, care is needed when putting this in place to ensure the right people are on the family council but they can play a vital role in communication.
It may also be desirable to have a family assembly, or family meeting or retreat. That is what we are going to look at in more detail in this show. But to briefly explain how it all knits together, you have the family charter that outlines the vision and purpose of the business, along with other matters that we discussed in episode 2 of this series.
You then have a family council that acts as the bridge between the business owning family and the business, typically via the board of directors and then you have the family assembly, this is on the other side of the bridge to the business and the board of the business and consists typically of all the adult members of the family, whether they are shareholders or not and whether they work in the business or not.
Who attends the Family Assembly
Some families include children in this group when they meet and the overall purpose of these assemblies or meetings is to help to foster a sense of belonging and emotional ownership amongst the wider family group.
Many of this group are not likely to be involved in working in the business and very often won’t be owners of the business.
They are normally held on an annual or sometimes bi-annual basis and can be used to promote family cohesion and to avoid the ‘us and them’ situation that can sometimes arise when there are elements of the family that are not directly involved in the business.
They give the wider family an opportunity to feed back to the board how they are feeling about the business, typically via the family council and that could be on such things as dividend levels, overall direction of the business or feedback on particular marketing campaigns.
They are often structured, but informal meetings and again its important to point out that any discussions or viewpoints put forward are not binding on the company. That doesn’t diminish the validity of the meetings or the views expressed at these meetings and it is always better that these views are heard, in a safe environment than to let them fester.
The family assemblies / retreats will often have a very strong element of training and education attached to them. They are an opportunity to educate everyone but in particular with a focus on the next generation. This could be training on business matters such as finances, marketing etc or they could be focussed on family dynamics education.
It can be an opportunity to identify within the family those that are interested in taking on future roles, not always within the business but potentially as part of the family council or the role of family champion that we have discussed before.
Because the overall purpose of the family assembly is to create cohesion and create bonds between family members who may only see each other at these meetings, it is important that there is a good social element to them to. Having designated activities such as dinners, sporting events or other bonding activities can help to develop stronger relationships and better teamwork between family members.
Spouses and Partners at a Family Retreat?
Who attends these meetings would generally be something discussed during the creation of the family charter but if the overall aim is for this to be as inclusive as possible it could be a case of the more the merrier!
Perhaps the thorniest issue is whether to include partners or spouses, or whether the family would prefer to keep this to direct descendants only.
Irrespective of what decision is made here, it is important to acknowledge that whether you like it or not, partners and spouses are going to have an influence over things and could perhaps bring different ideas.
You could also separate some of the more business focussed sessions to include only direct descendants but to have the social elements open to all.
So, how do you get started?
As I mentioned earlier the desire for and the make-up of a family retreat, or assembly will in part be dictated by the size of your business and the size of your family. This can be one of the discussions held when putting together your family charter. You may decide in those discussions that the family assembly acts as the family council and that this is sufficient for the size and shape of the business and family. You may make provision within the charter that once the family reaches a particular size or generation that the need for a family assembly is more obvious.
If one is needed now, you could assign the responsibility of organising it to the family council as part of their role and canvas some opinions on the sort of content that the family would find useful.
As with any of the issues that we discuss on these shows, if I can be of any assistance, please do not hesitate to contact me, my email address is firstname.lastname@example.org, we can set up a call to help get things started. Until next time, take care.