Say you and your family own a business together, and you’re trying to make a major decision. You agree to take a vote. That’s fair, right?
When it comes to fairness in decision-making, it’s a two-part analysis: For a decision to be considered fair, the participants must believe that both the outcome of the vote and the process by which it was conducted are fair.
Much is being made about Senate voting thresholds in the press these days. When can the Senate act by simple majority? When must there be a super majority of 60 votes rather than 51? More relevant to our purposes: what do the sometimes-arcane voting rules of the U.S. Senate have to do with family business decision-making?
More than you might think…
Created in the 1970’s by professors John Davis and Renato Tagiuri of the Harvard Business School, the Three-Circle Model is a time-tested and oft-referenced tool for understanding the relationships between the owners, business, and family in a family enterprise system.
Watch this short, informational video to help round your understanding of these critical relationships and gain insight that may change your perspective.
How do you create a Board of Directors? A Family Assembly? What about an Owners Council or Beneficiary Council? What will they do? Who will be on them? Well run forums are a significant asset when making major decisions and for aligning stakeholders across the enterprise system, but many families don’t fully utilize them. Learn how you might start to put forums to work in your family enterprise in this practical article.
In family business governance, structures like an owners’ council are of benefit as a family and their business become more complex over time. This begs the question, however, what should the council do?
The concept of Intention offers an innovative approach to answering this question, one that is firmly rooted in the realistic view that governance structures need to be designed in the image of the owning family.
Have you ever been in a meeting that felt aimless or got out of control? Do you wish your board of directors or owners council meetings were more organized? For family businesses looking to formalize their enterprise by developing a clearer process for meetings and decision-making, there is a time-tested architecture: Robert’s Rules of Order.
A board of directors is often promoted as a critical tool for growing family businesses—and rightly so. A well-constructed board can bring new thinking and perspective, better deliberation, along with expertise and experience that the business needs to grow and achieve its vision of success.
But boards are not a magic elixir, either. when the owners fail to communicate their vision—their direction—for the future of the business, there is a real possibility that the board’s well-intentioned efforts will veer off course, destroying capital the family has worked for years to create.
