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Entrepreneurial Family Businesses: T HE FAMILY BUSINESS COUNCIL

Entrepreneurial Family Businesses: T HE FAMILY BUSINESS COUNCIL. Family Business Australia Session: 27 th August 9.00am. Introduction. Brief history of Michell Holdings Period before the Family Council Period of the Family Council Phase 1 Formation Phase 2 Development and Growth

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Entrepreneurial Family Businesses: T HE FAMILY BUSINESS COUNCIL

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  1. Entrepreneurial Family Businesses:THE FAMILY BUSINESS COUNCIL Family Business Australia Session: 27th August 9.00am

  2. Introduction • Brief history of Michell Holdings • Period before the Family Council • Period of the Family Council • Phase 1 Formation • Phase 2 Development and Growth • Phase 3 Maturity • Warning signs to look out for • What Family Council’s can provide

  3. Brief History • The Beginning 1866 • 1935-58 Death causes transition • 1950 generation 4 arrives • 1970-80’s • 1991 – Realisation of the dynamics of family business

  4. Period before the Family Council Problems in existence: • People pulling in different directions • Clash of priorities of those inside the business & those outside • Culture of the family &/or Company not ready • “Change Agent” in our situation came from a shareholder driven shake up/crisis • “An idea that’s time has come”

  5. Reasons for its creation: Build a bridge between company & family Involve people in decision process Structure needs to fit family & business Ensure consultation Develop “will” to address problems “Understand the reason for being” Tasks/Focus: Gain support & enthusiasm for idea Hold meetings/ workshops Legal documentation Missions statements Charter Build momentum with success Don’t forget Fun Element! Phase 1 “Formation”

  6. One structure option Family: Family Council Charter Family Council Mission Company Constitution Company Mission Family Council: Involves all members of the family and appropriate close advisors (total: people interested over a certain age, family not Shareholder) Suggests/ advises/ guides Board Family Council Executive: delegated power or to get work done (3 to 8 members) Other Stakeholders Company: managed by a Board ( legal control of Company begins and ends with Board)

  7. Reasons for its existence: Council working effectively Making progress on addressing core issues Proactive push to new level of working together. Forums for both family & Company issues Tasks/Focus: Period of building trust Improved communication showing dividends Find & develop people to drive progress/ enthusiasm Gatherings/meetings more effective Phase 2 “Development & Growth”

  8. Phase 2 “Development & Growth”- Challenges • During this period the Family & Company faced a major challenge • Communication channels established before allowed solution to develop • Previous involvement through the Family Council allowed people to more readily become involved and understand issues • “Developed trust” allowed discussions & meetings to be more effective, in tackling difficult issues • Previous communication, allowed people to better understand others motivations • Overall resolution of problem better

  9. Phase 3 “Maturity & Future” • Maturity - relative term • Family Council’s primary role - stewardship • Maintain Family Council’s flexible structure • Family Council’s changing focus - forward looking, from ownership structures to education and social elements • Business cycles & next generation • Family Council governance/decision making framework

  10. Period 3 Maturity & Future • New “family tree” - journey not destination • Company/family interface now working well • Family needs communicated to Board • Challenge to maintain interest and commitment • Stewardship/Risk Management/Sacred Cows • FC charter – responsibilities and rules of the game • First step is the longest

  11. Warning signs to look out for! • People feel powerless • Inability for people to get ideas on the table • Communications channels poor • Company => Family • Family => Company • Feeling of insiders and outsiders • Lack of involvement options for next generation • Oppressed minority or groups disenfranchised • Older generation holding on, & not allowing change

  12. What Family Council’s can provide • Bridge between company  family • Open up channels of communication • Mechanism to build trust • Avenue for ideas to be heard and addressed • Structure to encourage change • Mechanism to foster younger members involvement • Allow wider group of family to be involved at their level of interest • Provides flexibility to address issues: company & family • Transitional structure to next generation • Shared decision making & ownership of direction • Awareness of family diversity • Empathy & respect • Try to avoid needing a crisis as a change agent

  13. Questions

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