How To Grow Your Business With A Family Board Of Management | Your Business Coaching Club

NegotiationThe days of casually operated family businesses have come to an end. To grow your business and compete with large corporations, you need to follow the lead of other successful family businesses and move from an ad-hoc management style to one using a more formal board of management or family business council to better structure the decision making processes.

 

Keep in mind however that a board of directors and a family board of management are two entirely different things.

 

A family board of management is structured more like an open forum and is used to directly resolve issues within the family that are critical to the success of the business. Since the line between family and business often gets blurred in a family-run operation, the board of management provides an open setting where members of the business and family can resolve issues that if left unresolved can lead to confusion, stress and even the downfall of the business.

 

If you implement a family board of management in your business, it is important to create a foundation of policies that can be used to resolve issues that may arise later. Some of the more common policies needed include:

 

Authority and Responsibility – Create a clear definition of who holds what authority and who is responsible for what positions in the company as well as on the board of management. Each individual should have a set list of expectations and responsibilities, and a clear definition of what their authority entails. In the end, everyone involved in the business and the board should be clear on who they report to and what they do for the business.

 

Work Hours and Vacations – A set number of work hours and days as well as vacation provisions per family employee should be created as part of the board’s policies.

 

Office Life – Members of the business should have a clear definition of where their office or workspace is, what work items they will provide on their own and what items belong to the business – family or not.

 

Compensation and Benefits – A detailed pay structure must be created that includes each member of the company and how much he or she receives in terms of compensation as well as healthcare or retirement benefits. The pay structures should reflect the true commercial worth of each person as if they were externally recruited.

 

These policies should be created using an “open forum” technique so that no family member or non-family member of the company feels that favoritism comes into play in terms of company policy.

 

You can grow your business using both a board of directors and a family board of management. Businesses that do not operate with a board of directors should definitely look to use a board of management to create a fair operating structure for their family run enterprise.

 

I would always recommend that at least the initial board meeting be facilitated by a business coach or other experienced person who is not related to the owners or directly associated with the business in any way. Ensure that the business advisor uses the first meeting to:

 

  • Create an environment based upon mutual agreement and trust amongst all family members involved in the business.

 

  • Give all members of the board of management a chance to share opinions about business operations and bring up any underlying business issues they may have.

 

  • Give the key family members within the business a chance to define goals for the company overall, listen to issues and reconcile any family disputes that may be directly affecting the company performance.

 

  • Provide assistance to family members when it comes to defining authoritative roles, relationships and the responsibilities of all company employees.

 

The Bottom Line

 

A family board of management should be a fear-free environment – meaning anyone who attends has the right to voice their opinions without fear of backlash, disagreement or future punishment. It is important for each family member to speak his or her mind in regards to the business operations until the entire group comes to a consensus view.

 

By implementing an effective board of management you not only have the greatest chance to grow your business, you will also grow the level of family trust and commitment to the business, as well as significantly improve the decision making structures within the business.

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