Photo by rawpixel.com from Pexels
“Govern your house and you will know how much cost firewood and rice; raise your children, and you’ll know how much you owe your parents.” – an Eastern proverb
One of the main objectives when working with or in a family business is to help create conditions that allow effective communication between the leaders of today and tomorrow. In our case study (the second-generation heirs to an empire of food distribution nationwide, the Woods brothers), the challenge of a crisis related to the transfer of the family business to the next and third generation (who so far had shown no interest in participating in the company) resulted in creating a plan to organise the succession with everyone’s involvement.
The family also brought in an external consultant that promised to help the Woods to create conditions that allow effective communication between the second and third generation through a system of “family governance structures”. These conditions were imperative and help the members discuss, analyse and propose different scenarios to address the future of the heritage they have shared so far.
The center of decision-making in the governance structure was a Family Council, a body cohesive in its decisions and goals based on effective communication, mutual respect, and recognition. To regulate these decisions and provide a framework of agreements that would allow them to function properly, the Woods siblings decided to create a set of rules called the Family Protocol.
Finally, they established what is called The Cousins Forum, which was designed to address the unique succession circumstances of the next generation, which was made up of not just siblings, but also a set of cousins.
The main goal of this kind of body was to be a key instrument in the preparation of the next generation to be capable and responsible owners as members of a wealthy family, and The Cousins Forum would report directly to the Family Council.
The Cousins Forum consisted of the following:
Forum Meetings:
As they hold meetings in well-organized sessions that address issues related to family governance and legacy, future shareholders learn to work together, to discuss, and to reach conclusions that develop their abilities as next generation leaders. Usually, Working Committees are created to address specific themes such as Philanthropy, Culture and Values, Management, or Entrepreneurship.
Educational training:
Education is designed to improve the group’s skills and knowledge that are specific to being responsible owners and / or managers. This is so that they can learn in areas that are unique to family businesses, and not likely to be covered by their formal education in university.
Although The Cousins Forum is specially designed for the next generation, the entire family can benefit from participating in the educational training sessions in order to generate the necessary conditions and safe environment to make a smooth succession that also gives room for orderly exchange of concerns and expectations among generations.
Every dialogue should confirm that the family wants to truly preserve its legacy, or, in the worst-case scenario, lead to solutions for those who don’t want to keep going on as a result of this process. This work will then lay the plans, strategies and projects to be undertaken by the family to achieve their goals, following the rules and the governance structures they’ve created, letting the effective conversations between generations be a natural part of their lives, for the sake of balance and harmony of their heritage preservation and transmission.
