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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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