What next after the Family Constitution? (Part 2)

“DEAR Professor Soriano,

Merry Christmas to you and your family!

I know you have a very hectic schedule and I hope you will find the time to read this email. For your reference, we signed a Family Constitution more than three years ago but sadly no one in the family took the initiative in implementing what was agreed upon.

The family consultant we engaged did not really place so much importance in the Family Council except to remind us that should there be some issues that need to be addressed, then the Family Council should be convened. We don’t even know how to convene.

At present, there is a brewing conflict among the Gen 2 siblings and I can sense that it will further escalate. We (Gen 3) are gravely concerned with this Gen 2 conflict and we want to fix this before it breaks us apart.

Unfortunately, we don’t know how to address this conflict and it is already affecting the family business. Even the employees are beginning to take sides. There were instances I wished we didn’t pursue the Family Constitution. It has become more of a liability. Do you think we can still follow the constitution? Is there still hope for our family?

Thank you and I look forward to any advice.”

Family councils

This email is just one of the many letters that I received right after I wrote about the activation of the councils. Allow me to share my thoughts and experience related to the implementation and activation of the Family Council. What are the objectives of the Family Council?

In an FBCG online article, Professor John Ward clearly articulates why the setting up of a Family Council is critical and important. He went on the further state some of the important objectives, to wit:

  • build and maintain effective personal and professional development programs for all family members in their chosen fields of endeavor and particularly for family members interested in participating in governance and management of family enterprises and family investments;
  • nominate qualified family members to be directors and hold other governance positions of the family council, the family business and family foundations; and
  • establish benchmarks and measures of accountability for performance of family businesses, investments and foundations.

Setting up the Family Council: it’s non-negotiable.

One of the most effective tools in managing family conflicts is the organization of a Family Council. I look at the setting up of a council as a very important tool to further the gains of the Family Constitution.

Its primary purpose is to facilitate free and open communication between family members in a formal manner to mitigate internal or interfamily conflict and hostility.

It can also be a forum for discussing issues of continuity and succession to include regulating their entry and disciplining family members in and outside of the business.

The key to the success of the Family Council is conducting actual family business meetings, which fall under its main activity. A family meeting serves to resolve family business issues and help maintain social relationships among its members.

Family members, especially those belonging to the second and third generations, may encounter initial difficulty in engaging in open and candid discussion on sensitive subjects. The key is to “break in” the family by initially addressing relatively non-controversial subjects first to pave the way for talks on more difficult issues. I strongly encourage the family to tap the services of a professional as facilitator.

Making the council operational

In my experience facilitating council meetings, I set the ground rules as a pre-condition to activating the Family Council. To get everyone organized, I would provide the leadership and guidance during the first few sessions so family members will get the traction they need.

After they have embraced the importance of the council meetings, the facilitator steps back to allow family members to appoint their chair who will eventually preside over the meetings. My role then shifts to pure oversight.

Perhaps, putting up the above organizational tools and the accompanying compliance will prove difficult for most Filipino and Chinese family businesses given the Asian’s non-confrontational attitude. But if they are to achieve economic growth and maintain stability, the effort must be undertaken. And it’s non-negotiable.

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