According to Emily Griffiths-Hamilton, author of Your Business – Your Family – Their Future, 70% of family businesses fail to transfer the business from one generation to the next. This means that only one company out of ten survives until the third generation! According to Ms. Griffiths-Hamilton, 60% of these failures are due to a breakdown in communication and trust between family members. This is an issue that cannot be ignored, but that might be solved by considering a family council.
Experts agree that setting up a family council is one of the best ways to remedy this state of affairs. The family council provides a forum to exchange and build common values. In doing so, family members can develop a common vision of what is right. They can also agree on the long-term goals of the family with respect to the business. With this common thinking, the family council can influence and guide the board of directors of the company.
Here are the 5 keys to a successful family business council:
- Develop a code of conduct that promotes listening, communication and participation.
- Establish criteria for determining who can participate in the family council.
- Use an agenda to identify topics of conversation and send it to participants several weeks in advance, along with the documents that will be discussed. Forward the meeting with a report or minutes.
- Choose a safe and confidential place, away from distractions, to foster a climate conducive to constructive exchanges.
- Use the services of an external and neutral facilitator to avoid conflicts and blockages.
You may find it useful to take inspiration from the example of other family businesses. For this purpose, you can contact the Family in Business organization by visiting the site (in French) www.famillesenaffaires.hec.ca. The team at Force-Legal Inc. remains available to you in your time of need, feel free to call us at 450-218-7088.