This week, Peter Pagonis, a senior partner who leads
Deloitte's Family & Individual Wealth practice in
Australia, discusses the benefits of introducing a family council
We often hear about how having a family council can be hugely
important for family owned businesses. They seemingly bridge the
gap between family and business, and in the best cases, manage to
simultaneously meet the needs of both.
But what exactly is a family council? And what are the
key considerations to ensure they are a force for good?
An introduction to family councils
I would simply describe a family council as a
'representative body' of the broader family.
Communication is often an issue for family businesses, as
individuals may not feel comfortable exchanging feedback with each
other or may not be used to talking openly. A family council
structure aims to remedy this problem, and is an excellent way of
providing a comfortable, safe place for everyone to have their
opinions and concerns voiced and listened to, and acts as a forum
for transparency and communication.
It is also a conduit for communication between the family and
the business, and ensures that the family speak with 'one
voice' to all external stakeholders.
Typically, family council meetings are held quarterly or
bi-monthly, and are attended by all members of the family council.
There should always be a clear agenda for each meeting, and it is
useful for families to choose a facilitator to chair the meetings.
This can either be a family member or a non-family member, however,
in our experience, having an independent (non-family) facilitator
can be useful when the council is first formed, to help ease the
transition into a more 'formal' way of communicating.
Some of the key functions/benefits of a family council:
They provide a structured flow of opportunity to discuss
issues in an environment that has representatives from the
They set the tone for 'how things are done' – in
the family and in the family business
They deliver opportunity for family members to be involved who
may not be working in the business
They can be used to anticipate issues and discuss challenges
– a proactive rather than a reactive measure
They provide leadership, direction and a place to set goals for
They are a place to plan activities, communications, and
educate or discuss something that you need a direct answer on
In summary, the family council can get the word out and
information back in a very structured way, providing input and
output from the family.
Why else are family councils important?
As I have already touched upon, one of the main challenges faced
by family businesses is a lack of transparency, particularly with
regard to the involvement of the next generation, where limited
clear family rules can lead to disharmony.
Having a family council can help families to minimize this
issue, as it acts as a forum in which to openly share and discuss
the business with the younger generation. It's vital that they
have an opportunity to provide input into the family business and
have their ideas and feedback heard to give them a proper sense of
ownership. A family council can also provide them with the
education and support needed to make informed choices about their
future – whether that's tied to the family business or
I'm certainly of the view that family councils are one of
the most powerful and engaging tools for families to communicate
openly and regularly with one another. However, ultimately, the
success of a family council hinges on whether family members are
actually willing to participate and communicate openly with one
another, and on how the council interacts with other important
elements in the overall family governance structure.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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