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Entrepreneurial Family Businesses: T HE FAMILY BUSINESS COUNCIL. Family Business Australia Session: 27 th August 9.00am. Introduction. Brief history of Michell Holdings Period before the Family Council Period of the Family Council Phase 1 Formation Phase 2 Development and Growth

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entrepreneurial family businesses t he family business council

Entrepreneurial Family Businesses:THE FAMILY BUSINESS COUNCIL

Family Business Australia

Session: 27th August 9.00am

introduction
Introduction
  • Brief history of Michell Holdings
  • Period before the Family Council
  • Period of the Family Council
    • Phase 1 Formation
    • Phase 2 Development and Growth
    • Phase 3 Maturity
  • Warning signs to look out for
  • What Family Council’s can provide
brief history
Brief History
  • The Beginning 1866
  • 1935-58 Death causes transition
  • 1950 generation 4 arrives
  • 1970-80’s
  • 1991 – Realisation of the dynamics of family business
period before the family council
Period before the Family Council

Problems in existence:

  • People pulling in different directions
  • Clash of priorities of those inside the business & those outside
  • Culture of the family &/or Company not ready
  • “Change Agent” in our situation came from a shareholder driven shake up/crisis
  • “An idea that’s time has come”
phase 1 formation
Reasons for its creation:

Build a bridge between company & family

Involve people in decision process

Structure needs to fit family & business

Ensure consultation

Develop “will” to address problems

“Understand the reason for being”

Tasks/Focus:

Gain support & enthusiasm for idea

Hold meetings/ workshops

Legal documentation

Missions statements

Charter

Build momentum with success

Don’t forget Fun Element!

Phase 1 “Formation”
one structure option
One structure option

Family:

Family

Council

Charter

Family

Council

Mission

Company

Constitution

Company

Mission

Family Council:

Involves all members of the family and appropriate close advisors

(total: people interested over a certain age, family not Shareholder)

Suggests/ advises/ guides Board

Family Council Executive:

delegated power or

to get work done

(3 to 8 members)

Other Stakeholders

Company: managed by a Board ( legal control of Company begins and ends with Board)

phase 2 development growth
Reasons for its existence:

Council working effectively

Making progress on addressing core issues

Proactive push to new level of working together.

Forums for both family & Company issues

Tasks/Focus:

Period of building trust

Improved communication showing dividends

Find & develop people to drive progress/ enthusiasm

Gatherings/meetings more effective

Phase 2 “Development & Growth”
phase 2 development growth challenges
Phase 2 “Development & Growth”- Challenges
  • During this period the Family & Company faced a major challenge
  • Communication channels established before allowed solution to develop
  • Previous involvement through the Family Council allowed people to more readily become involved and understand issues
  • “Developed trust” allowed discussions & meetings to be more effective, in tackling difficult issues
  • Previous communication, allowed people to better understand others motivations
  • Overall resolution of problem better
phase 3 maturity future
Phase 3 “Maturity & Future”
  • Maturity - relative term
  • Family Council’s primary role - stewardship
  • Maintain Family Council’s flexible structure
  • Family Council’s changing focus - forward looking, from ownership structures to education and social elements
  • Business cycles & next generation
  • Family Council governance/decision making framework
period 3 maturity future
Period 3 Maturity & Future
  • New “family tree” - journey not destination
  • Company/family interface now working well
  • Family needs communicated to Board
  • Challenge to maintain interest and commitment
  • Stewardship/Risk Management/Sacred Cows
  • FC charter – responsibilities and rules of the game
  • First step is the longest
warning signs to look out for
Warning signs to look out for!
  • People feel powerless
  • Inability for people to get ideas on the table
  • Communications channels poor
    • Company => Family
    • Family => Company
  • Feeling of insiders and outsiders
  • Lack of involvement options for next generation
  • Oppressed minority or groups disenfranchised
  • Older generation holding on, & not allowing change
what family council s can provide
What Family Council’s can provide
  • Bridge between company  family
  • Open up channels of communication
  • Mechanism to build trust
  • Avenue for ideas to be heard and addressed
  • Structure to encourage change
  • Mechanism to foster younger members involvement
  • Allow wider group of family to be involved at their level of interest
  • Provides flexibility to address issues: company & family
  • Transitional structure to next generation
  • Shared decision making & ownership of direction
  • Awareness of family diversity
  • Empathy & respect
  • Try to avoid needing a crisis as a change agent
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