According to David Dudon’s article in The CEO Advantage Journal, Managing the Family Business, one of the three most critical disciplines of sound governance is conducting an annual family business meeting.
Considering that Dudon was a partner and later CEO and President of a large successful family business, The Mutual Group, for 16 years, he has extensive experience in this area.
The significance of meetings as part of proper business management is something that most family business advisors will agree on. But what exactly does it mean to have a family business meeting and how should one best go about conducting it?
The kind of family business meetings that Dudon refers to are not the type of management meetings that businesses generally have on a weekly, fortnightly, or even a monthly basis. It rather talks to what can best be described as a ‘family council’.
A family council meets every now and again to discuss issues that affect both the family and the business.
Usually a family council meeting will involve family members who work in the business, as well as non-executive members of the family. Topics covered should generally include ownership and shareholders, the strategic vision for the business, the family’s general code of conduct centred around the business, succession strategy, voting rights, and so forth.
In the same manner as one would do when they conduct strategic workshops or have team-building sessions, family business meetings should best be done off-site, in a more casual environment. The aim of this is to create an objective, neutral environment, as well as ensure that the meeting is focussed, due to fewer work-related distractions. Furthermore, this environment provides an opportunity for decision-makers to socialise outside of the work environment, strengthening key relationships.
To ensure that these meetings are as constructive and productive as possible, they should not be held too often.
“These meetings should be annual. If more frequent, they just become a job or a party,” states Dudon.
A key formality that no meeting should do without, is the official recording. For tracking and reference purposes, notes should be kept on file. These can play a key role should disputes arise in future over what has been agreed upon at family council meetings.
Family business meetings should not be regarded as ‘nice-to-have’, but rather as ‘need-to-have’. This guarantees transparency, ensures open channels of communication, and enables family members to the proactively resolve the classical issues that arise from families in business.
It’s also a good way to clarify business matters for those family members who are not hands-on or employed in the business. Such non-executive family members more often than not have an unrealistic view of what the working family members should be paid, which of their expenses should be covered by the business, and how much of their time and effort should be committed to the business. It is therefore in the best interest of everyone involved to talk about this openly.
Lastly, but perhaps most importantly, the meeting creates a platform for family members to reach consensus on management of the business. It enables the family to gain unified strategic vision, which is necessary to elevate the business to its maximum potential.
To make ends meet in a family business, family members not only have to meet physically, but also sometimes have to meet each other halfway.