Every good and thriving business is founded on a set of core principles and values guiding its operations. Likewise, family governance is a structure/process families put in place to guide how they interact with the family business. A well-designed and properly implemented, family governance structure can help set boundaries, provide clarity, and result in greater congruence between family members, especially as it relates to the growth of the family business or enterprise, and its transition between generations. For effectiveness and efficiency, a family governance structure must reflect the particular culture, dynamic, and objectives of the family. One of the tools for achieving an effective and efficient family governance is the family assembly.
A family assembly is an open forum in a formal setting for all eligible family members, to engage in focused discussions and deliberations on their vision, values, roles, responsibilities and activities as a family. It provides an avenue especially for those involved in the family business, to reach a consensus and align on major issues. Put differently, a family assembly is a periodic gathering of eligible family members where issues surrounding the family and family business are discussed. Family assembly activities involve learning about the business through presentations by family and non-family managers, deliberations on the direction of the company, and education about what the family business entails or about important skills to be acquired. It also serves as an avenue for updates to be provided on happenings in the family business such as ownership, structure, new tax laws that may affect the business and its shareholders etc.
In practice, a family assembly is typically held as often as may be necessary as most family members will be available. It is an avenue for family members to have the adequate opportunity to communicate and share their views on important issues. Besides the discussions about the family enterprise, a family assembly may be organized to include sessions around educational, developmental, and financial needs of the family. Sometimes, it may include some social elements such as family bonding or other activities the whole family enjoys.
Typical Issues Discussed at the Family Assembly
Organizing a family assembly has a number of advantages including strengthening unity and cohesion among family members and facilitating the growth and efficiency of the family business. The issues that should be discussed at the family assembly is highly dependent on the nature and state of the family/business. We have highlighted below, some important issues (amongst others) that are typically discussed at the family assembly.
- Election of family council members: The family council is the leadership arm of the family governance structure; they are charged with making key strategic decisions on behalf of the family. A family assembly provides the forum to elect new members into this council.
- Roles and responsibilities of family members: During a family assembly, the roles, duties, and responsibilities of each family member in relation to the family business are clearly spelt out, discussed or assigned/reassigned.
- The direction of the family business: The family assembly provides an opportunity to discuss plans, policies, procedures and operations to effectively regulate the family business
- Changes in the family business structure: where there is a proposed change to the family business structure (e.g. acquisition of new shares or business lines), the family assembly serves as an avenue to discuss these new family business undertakings and ventures, as well as garner the support of the entire family for these new ventures.
Strategies for Having a Successful Family Assembly
As earlier established, a family assembly is a periodic gathering of all family members where issues surrounding the family and family business are discussed. Some of the accompanying challenges associated with such gathering is the possibility of conflict of interest, ideological differences and varying perspectives of issues. Certain measures that have worked for various families, can be put in place to avoid these challenges. Some of these are discussed below:
- Set out clearly defined goals and objectives: The meetings should be thoroughly and deliberately planned with clearly set out goals and objectives. The most important tool for achieving this is through the setting of the agenda which includes the topics to be discussed and the reason for the discussion. This should be shared in advance with all participants in the assembly. Clearly stipulating the goals and objectives to be achieved, helps to serve as a means of evaluating the success or otherwise of the family assembly.
- Encourage active participation by family members: All participants in the family assembly should be encouraged to contribute to the issues being discussed. It is important that the facilitator of the meeting structures the assembly in such a manner that each participant provides an input on the issues being discussed.
- Address disagreements in an amicable manner: Varying opinions are bound to arise during a family assembly, however, addressing each opinion amicably creates a safe environment where family members can express their opinions without fear of punishment or retaliation. Show lots of love (parents may need to be role-models in this regard, during difficult discussions).
- Deploy emotional intelligence and people management skills: Managing emotional energy is a very critical aspect of family gatherings. This is due to the fact that for family enterprises, there is the double role of being both family members and business associates. This implies that emotional outbursts are an everpresent reality. Hence, emotional energy is one of the most dreaded aspects of family meetings. It is very important that the facilitator of a family assembly is capable of displaying a high level of emotional intelligence and management during such meetings.
- Use of a capable facilitator: The family council should consider using a family consultant to facilitate such meetings especially where there are difficulties in reaching a consensus or where emotional energy is deeply problematic.
Benefits of Having a Family Assembly
- Build consensus for strategic family business decisions: The family assembly serves as a forum for making important family business decisions as it helps to reduce the potential for poor decision-making. Considering that most of the eligible family members are typically present at the family assembly, diversity in opinions and perspectives on strategic decisions are considered before key decisions are made.
- Tool for wealth succession and discovering business talents within the family: Aside from the obvious fact that family assembly provides an opportunity for those running the business to discuss matters that are linked to the family enterprise, it also enables them to spot businesstalent in the rising generation and look at ways of developing future leaders of the family.
- Ward off external intrusion: Having regular family assemblies help to guard against outside interference with the business while ensuring that the family's key goals are satisfied. Through the periodic gathering of family members during the family assembly, the family members are able to create a stronger bond and reach a consensus on areas of importance and burning issues, thereby being able to ward off external intrusion and assemblies.
- Staying acquainted with the family's objectives: The family assembly also serves as an avenue for family members to get acquainted with each other, especially for the younger generation, who may have little or limited knowledge about their extended family. In addition, family social gatherings help to create healthy, harmonious family relationships.
To achieve an effective family governance structure, there is a need to organize the family assembly regularly. Such gathering enables the family define the direction of the family business and discuss other issues necessary for the overall progress and continuity of the family business. It is expedient that during such gatherings, each family member should be encouraged to participate and the agenda should be deliberately planned with clearly set out goals and objectives.
Eligibility for Participation in a Family Assembly
Families differ and vary as it concerns the eligibility for participation in family assembly. This largely has to do with the relationship dynamics that exist within the family structure. In other words, the eligibility criteria for participation in a family assembly is typically outlined by each family. However, generally speaking, we can identify those who may be considered eligible to participate in family assembly.
The direct descendants of the Founders (patriarch and matriarch) are typically eligible for participation in the family assembly, especially if they have attained the legal age and do not possess mental or physical challenges that may inhibit their ability to properly contribute to the discussions. Families typically decide at what age children would be considered eligible to attend these meetings. While some families state that children are eligible to attend when they have attained the age of 18, (which is the legal age in Nigeria), in practice however, most families start including their offsprings in the family meeting around age 16. For the younger children, some families typically organize some group activities where the children can begin to learn about the business, and develop relationships with their extended families pending when they become eligible for participate in the family assembly.
In some families, in-laws who have been married into the family for a reasonable period of time (what constitutes a reasonable period may be defined by the family), are also eligible for participation in a family assembly. Widows/widowers who were married to a family member for a reasonable period of time are also considered eligible for participation.
Conclusion
To achieve an effective family governance structure, there is a need to organize the family assembly regularly. Such gathering enables the family define the direction of the family business and discuss other issues necessary for the overall progress and continuity of the family business. It is expedient that during such gatherings, each family member should be encouraged to participate and the agenda should be deliberately planned with clearly set out goals and objectives. More importantly, we strongly recommend using a family consultant as the first few meetings can be hard to put together.
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.
