Entrepreneurial Family Businesses: THE FAMILY BUSINESS COUNCIL Family Business Australia Session: 27 th August 9.00am.

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Presentation transcript:

Entrepreneurial Family Businesses: THE FAMILY BUSINESS COUNCIL Family Business Australia Session: 27 th August 9.00am

Introduction Brief history of Michell Holdings Brief history of Michell Holdings Period before the Family Council Period before the Family Council Period of the Family Council Period of the Family Council Phase 1 FormationPhase 1 Formation Phase 2 Development and GrowthPhase 2 Development and Growth Phase 3 MaturityPhase 3 Maturity Warning signs to look out for Warning signs to look out for What Family Council’s can provide What Family Council’s can provide

Brief History The Beginning 1866 The Beginning Death causes transition Death causes transition 1950 generation 4 arrives 1950 generation 4 arrives ’s ’s 1991 – Realisation of the dynamics of family business 1991 – Realisation of the dynamics of family business

Period before the Family Council Problems in existence: Problems in existence: People pulling in different directions People pulling in different directions Clash of priorities of those inside the business & those outside Clash of priorities of those inside the business & those outside Culture of the family &/or Company not ready Culture of the family &/or Company not ready “Change Agent” in our situation came from a shareholder driven shake up/crisis “Change Agent” in our situation came from a shareholder driven shake up/crisis “An idea that’s time has come” “An idea that’s time has come”

Phase 1 “Formation” Reasons for its creation: Build a bridge between company & family Build a bridge between company & family Involve people in decision process Involve people in decision process Structure needs to fit family & business Structure needs to fit family & business Ensure consultation Ensure consultation Develop “will” to address problems Develop “will” to address problems “Understand the reason for being” “Understand the reason for being” Tasks/Focus: Gain support & enthusiasm for idea Gain support & enthusiasm for idea Hold meetings/ workshops Hold meetings/ workshops Legal documentation Legal documentation Missions statements Charter Build momentum with success Build momentum with success Don’t forget Fun Element! Don’t forget Fun Element!

One structure option 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: 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) Family Council Executive: delegated power or to get work done (3 to 8 members) Company: managed by a Board ( legal control of Company begins and ends with Board) Family Council Charter Family Council Mission Company Constitution Company Mission Family: Other Stakeholders

Phase 2 “Development & Growth” Reasons for its existence: Council working effectively Council working effectively Making progress on addressing core issues Making progress on addressing core issues Proactive push to new level of working together. Proactive push to new level of working together. Forums for both family & Company issues Forums for both family & Company issues Tasks/Focus: Period of building trust Period of building trust Improved communication showing dividends Improved communication showing dividends Find & develop people to drive progress/ enthusiasm Find & develop people to drive progress/ enthusiasm Gatherings/meetings more effective Gatherings/meetings more effective

Phase 2 “Development & Growth” - Challenges During this period the Family & Company faced a major challenge During this period the Family & Company faced a major challenge Communication channels established before allowed solution to develop Communication channels established before allowed solution to develop Previous involvement through the Family Council allowed people to more readily become involved and understand issues 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 “Developed trust” allowed discussions & meetings to be more effective, in tackling difficult issues Previous communication, allowed people to better understand others motivations Previous communication, allowed people to better understand others motivations Overall resolution of problem better Overall resolution of problem better

Phase 3 “Maturity & Future” Maturity - relative term Maturity - relative term Family Council’s primary role - stewardship Family Council’s primary role - stewardship Maintain Family Council’s flexible structure Maintain Family Council’s flexible structure Family Council’s changing focus - forward looking, from ownership structures to education and social elements Family Council’s changing focus - forward looking, from ownership structures to education and social elements Business cycles & next generation Business cycles & next generation Family Council governance/decision making framework Family Council governance/decision making framework

Period 3 Maturity & Future New “family tree” - journey not destination New “family tree” - journey not destination Company/family interface now working well Company/family interface now working well Family needs communicated to Board Family needs communicated to Board Challenge to maintain interest and commitment Challenge to maintain interest and commitment Stewardship/Risk Management/Sacred Cows Stewardship/Risk Management/Sacred Cows FC charter – responsibilities and rules of the game FC charter – responsibilities and rules of the game First step is the longest First step is the longest

Warning signs to look out for! People feel powerless People feel powerless Inability for people to get ideas on the table Inability for people to get ideas on the table Communications channels poor Communications channels poor Company => FamilyCompany => Family Family => CompanyFamily => Company Feeling of insiders and outsiders Feeling of insiders and outsiders Lack of involvement options for next generation Lack of involvement options for next generation Oppressed minority or groups disenfranchised Oppressed minority or groups disenfranchised Older generation holding on, & not allowing change Older generation holding on, & not allowing change

What Family Council’s can provide Bridge between company  family Bridge between company  family Open up channels of communication Open up channels of communication Mechanism to build trust Mechanism to build trust Avenue for ideas to be heard and addressed Avenue for ideas to be heard and addressed Structure to encourage change Structure to encourage change Mechanism to foster younger members involvement Mechanism to foster younger members involvement Allow wider group of family to be involved at their level of interest Allow wider group of family to be involved at their level of interest Provides flexibility to address issues: company & family Provides flexibility to address issues: company & family Transitional structure to next generation Transitional structure to next generation Shared decision making & ownership of direction Shared decision making & ownership of direction Awareness of family diversity Awareness of family diversity Empathy & respect Empathy & respect Try to avoid needing a crisis as a change agent Try to avoid needing a crisis as a change agent

Questions