Are you thinking to yourself, we don’t need a Family Charter? Everything is fine! We don’t have any issues! Well now is the perfect time to discuss what you want the future to look like for your family and your business. You can visualise what you want things to look like in the future and consider all – what if scenarios.
Megxit is a prime example of what can be avoided if the family had a Family Charter. Had they met earlier on and discussed what if a family member wants to leave the business. What do we want that to look like? A lot of what seems to have played out in public could have been avoided. Now their exit is an easy example to use as it was so public but this scenario plays out in family businesses regularly.
Another example is when siblings are in business together and they bring their children into the business and a nephew isn’t performing. This is such an awkward conversation to have, your brother could take offence. He could start picking faults with your children. How can you still come together as a family when you want to sack a family member? But had you discussed with your brother in the early days, the entry rules, exit rules and discuss how family are expected to meet the same performance standards and be treated as all staff. This could be a different conversation.
A Family Charter or Constitution is also known as a “Family Rule Book.” I am a believer it isn’t about the outcome, rather the process. I have a 5 step process;
1. An introductory meeting with the family, I introduce the process and also ensure the family see me as a facilitator not siding with any individual family members.
2. One on one interviews with each family member. It is important everyone has their say.
3. 2 day Workshop to discuss where the family member’s views were aligned, also where family members had different views. It is important the night between to have a social dinner, we find this dinner reminds family members how much they enjoy one another’s company and a reminder why they like to be in business together.
4. Family Charter – the final product is signed and all parties agree to the rules set. Remember, this is not set and forget, as the family grows and the business grows, there will be times it needs to be updated and refreshed.
5. Family meetings – it is time to put structure into your meetings and have an independent facilitator. This will enable you to make decisions and refer to your Family Charter for guidance.
What family members are included in the process?
It is up to each family who they would like included in the process. All I ask people to consider is anyone excluded, can be the ones who cause the trouble. Often they assume the worse and this can lead to resentment. Also, remember pillow talk. This is relevant to in-laws. If you only include family members, you may have full agreement amongst the family, then they discuss it with their spouse overnight and come back with a different decision the next day. This can undo the process.
What does a Family Charter include?
. The family’s vision;
. The Family values;
. A Code of Conduct for managing differences;
. Voting rules;
. Confidentiality;
. Employment of family members, including
. Entry rules;
. Exit rules;
. Remuneration
. Education of family members;
. Behaviour expectations (to ensure no damage is caused to the family brand)
. Ownership and Ownership Transition etc.
Is a Family Charter relevant to Family Office as well as Family Business?
Yes. The issues that arise with families working together in business can also arise with families building wealth together. You need all family members aligned and also in family office, it is important all family members are educated on finances and financial responsibility, this will become especially important when discussing:
. sustainable investing;
. philanthropy
If you would like an obligation free meeting to discuss our process and the benefit to your family, please don’t hesitate to contact me on 0411 205 279 or kirsten.taylor-martin@au.gt.com