Joseph H Astrachan is executive director, Cox Family Enterprise Center.
Kristi S McMillan is director, Cox Family Enterprise Center.
Family meetings can be the ideal place to establish values and air the conflicts within the family business. Joseph H Astrachan and Kristi S McMillan explain how important these meetings can be and how you can get the most out of them
Like air, water and food are to the body, family meetings are to the long-term viability of any family business. They build strength and protect against external threats and internal crises alike. They are a proven success factor. They are easy to implement, though any change can require hard work; hard work that can be as uncomfortable as it is valuable.
I was talking with a family member from one the world's great publishing families days before the Bancroft family voted to sell their legacy, and he remarked how his family would need to increase the frequency and duration of their family meetings to stave off an attack. He said it perfectly when he explained that, in his vision, his family will be unified in its value for the company, bound by a common history and culture. Essentially, they will be united in not wanting to give up that which in large part defines them. And in this sentiment, he captured the compelling value of family meetings.
In our research at the Cox Family Enterprise Center at Kennesaw State University's Coles College of Business in Atlanta, we have concluded that family meetings are one of the three needs of family business vitality. The other two are boards of directors and strategic planning.
This theory is echoed by other scientists. In the last month our center was joined by Dr Torsten Pieper who earned his doctorate from the European Business School. His research on centuries-old family businesses concluded that they attain that status by binding family members to the business and family both emotionally and financially; and that both the business and family need to independently attend to emotional and financial needs.
Family meetings are crucial because when they have developed into a mature state, they provide the family with the ability to predict and solve problems before they arise. Family meetings are extremely useful for building cohesion, which means they are also venues for the family to work through and resolve differences; both immediate and more subtle, deeper and long-term differences.
Family meetings give family members an opportunity to determine the family's values (which provide guidance for resolving conflicts and setting family and business priorities), to set the family's mission, and establish common family expectations as well as expectations about the family's interaction with the business. Expectations are set through discussion and formal agreement and are essential to establishing a tone of trust and fairness.
Meeting expectations consistently can only be done if they are set explicitly and if expectations that are met produce a sense of fairness and trust. Unspoken expectations are haphazardly met at best and lead to jealousy and disappointment – two forms of family business cancer. Expectations to be set can be:
- Simple things, such as attending family events or returning phone calls from family members.
- Deeper issues, such as how family should behave toward the poor and disadvantaged.
- Family process issues, such as how and when family members should resolve conflict or what is expected in terms of educational attainment.
- Business issues, such as conditions under which family can work in the company, dividend and financial return policies, debt tolerance, values that the business needs to exemplify, or how stock in the business is bought, sold, and transferred.
It is also critical that expectations are revisited frequently enough so that they can be adapted to changing circumstances and that they can maintain a high level of commitment from all family members.
Less is more
An important note of caution needs to be sounded: do not start family meetings with the whole family unless your family is very open, honest and capable of working through the most embarrassing and volatile of conflicts. Too often family meetings are started with too large a group and are so disastrous and explosive that the family becomes prejudiced against ever trying another open meeting. We suggest starting family meetings with modest goals and a membership that is likely to be successful. Start with the most harmonious subset of the family available. This might be single-generation owners working in the business or it might be another subset. Gradually, this can be expanded to include other generations, owners not employed in the business, spouses, and non-owning family members.
Research indicates that meetings should be regular and frequent. Obviously once a year is better than not at all, but the more often a family meets (assuming it has developed adequate harmony), the better. This is because the hard formative work of family meetings is quite time-consuming and even setting just a few expectations and developing a family values statement can take a dozen or more meetings.
Getting to the point where expectations on the most pressing issues have been set, resolving conflict is easy, communication is free-flowing on the most flammable topics, and the younger members of the family are getting a consistent education into the "ways" of the family, in our estimation can take 50 or more meetings (or a lot of luck).
Family meetings should be run fairly formally, though rest and recreation are good to build into meetings as they also encourage bonding. There needs to be a chair who makes sure that a meeting agenda is set (though an agenda committee can be used as well) and that all meeting logistics are handled. The chair must hold people to account for commitments they made to get things done for the meetings, and manage the meetings to ensure maximum and equal participation by all participants. Two minutes is a minimum amount of time to feel included and heard. Because the chair has to encourage people to talk and silence others, it is wise to choose a chair who is the least likely to upset others when asking them to stop talking.
While an agenda is a useful tool, it is not a good idea to simply copy others. Agendas should be based on the circumstances of the family, such as the ability to handle conflict and willingness to work on tasks. For newly-forming family meetings, it is a good idea to find topics that there is energy to address and topics where solutions or agreements are relatively easy to come by. The many topics listed already can provide ideas. Two helpful agenda items are: going over what has been agreed to at the last meeting, including progress on any tasks engaged; and, at the end of the meeting, restating all new agreements.
Asking for help from those well-versed in family meetings is generally a good idea. Absolutely ask for help or at least change your tactics if you see any of the following warning signs: family not returning calls or emails, unequal participation during meetings, low attendance or declining attendance at meetings, only positive remarks when asking for feedback about the meetings, people being unwilling to take a break when conversations get emotionally heated during meetings, misinterpretation of remarks during meetings, an inability to reach agreements, or a general lack of direction.
Family meetings are essential. They are also hard work and, as such, not always enjoyable. However, when executed consistently and diligently over a moderate amount of time, they will ensure greater unity in the family and support of the business in good times and bad, and that is the hallmark of true partnership and world-class families.