1. Chapter 7 The Family Culture
Family Business, First Edition, by Ernesto J. Poza
Copyright © 2004 South-Western/Thomson Learning

2. Unhealthy Family Culture
Characterized by
Secrecy
Lack of information
Absence of education
Result of
Founding culture that supported autocratic leadership
Belief in benefits of privacy
Zero-sum dynamics

3. Zero-Sum and Family Culture
Zero-sum dynamics characterized by exchanges in which one party’s perceived gain is the other party’s perceived loss
Us-and-them dynamic can be triggered by any perceived difference: male–female, active–inactive, older–younger, etc.

4. Family Culture and Communication
Family Business Continuity?
COMMUNICATION,
INFORMATION,
KNOWLEDGE
Use of Management & Governance Practices
Family Culture/Family Unity?
Organization
Culture/Business
Opportunity?

5. Family Councils . . .
Provide reliable forum for delivering information about state of business
Offer safe haven to teach family members rights and responsibilities of ownership
Educate family members about estate tax issues and management of wealth
Allow for policy making on issues such as participation, strategy, and liquidity

6. Makeup of Family Council
May include direct descendants only
Usually all adult family members, including spouses
Children over 16 may attend
Younger children may have parallel activities such as games or simulations

7. Benefits of Family Councils
Build stronger families
Re-commit the family to the business, which builds a stronger business
Provide a family forum so members won’t all want to sit on board of directors
Allow planning of future family participation
Allow planning of future ownership and control of business

8. Benefits of Family Councils, continued
Help the next generation manage wealth
Preserve important family values, traditions, history, and knowledge about business
Open up succession and continuity issues
Professionalize the business
Allow on-going problem-solving and conflict resolution

9. Family Unity and Continuity
Family unity achieved through councils and assemblies good predictor of use of best business practices
Planning for continuity
Performance feedback
Succession planning disclosure
Advisory boards
Family meetings

10. Planning and Policy Making
Family councils foster open and safe processes for sharing information
Focus of family council should be conversations, deliberations, presentations
Council may suggest policies such as
Employment and subcontractor policies
Board service and family council service policies
Dividend and liquidity policies
Family constitution

11. Guidelines for Policy Making
Involve as many family members as relevant to current policy
Look at the big picture
Focus on the future
Use experienced facilitators
Agree on process to develop, review, edit, and enact policies

12. Conflict Management
Family councils can provide forum for minimizing conflict
Family councils can address problems such as
Frustration over lack of inclusion
Anger over unfairness of hiring practices, promotions, benefits, etc.
Frustration over dividends and lack of liquidity

13. Family Council Cautions
Don’t bring together relatives who aren’t speaking to each other
Don’t have first meeting during significant family conflict
Start small, with direct descendants, and then graduate to spouses and children over 16
Consider inviting a facilitator
Don’t use family meeting to rehash old conflicts or blame others for past actions

14. Plan a Family Meeting Decide who to invite
Decide where to hold the meeting
Decide if facilitator or other resources needed
Work with facilitator to suggest agenda
Develop structured agenda before meeting
Develop a set of ground rules or code of conduct
Include exercises and educational modules
Schedule time for relaxation and family fun

15. Suggested Topics and Issues
State of the business
Development of family mission statement
Development of family policies; e.g. employment
Identification of policies or necessary legal documents
Management of succession
Development of next generation
Estate planning
Family strategy and business strategic planning
Family communication

16. Family Office
Enhances family’s ability to regulate relationship between family and company
Provides and organizes services for family shareholders, including
Offering legal and financial aid with estate and tax issues
Managing investments and diversifying portfolios
Providing information to shareholders
Distributing family or shareholder benefits