Using family governance to improve communication

Open and transparent communication in the family is key to the long-term success of a family enterprise, as it strongly predicts the presence of a shared vision for the business and makes it more likely that next generation leaders will be effective. (See Professor Steve Miller’s research.)

If open, transparent communication is so important, how does a busy family cultivate it?

The Family Enterprise Center’s fourth annual “Family Business Forum: The Family Governance Journey” was designed to help families answer this question.

Three generations of the Kelly family (KELLY, Sparks, Maryland) shared their family’s governance journey which began when two members of the third generation, Frankie and Stephen Kelly, took the Family Enterprise Center’s family business courses. With candor and humor, the Kelly family shared stories from their first family meeting that included all members of G1, G2, and G3.  While their first meeting was not perfect, it opened a dialogue and gave them an opportunity to celebrate their shared family values.

Forum participants discussed lessons learned from the Kelly family and then had an opportunity to assess their own family’s communication, envision their desired future state, and determine necessary steps to work toward their goal of open, transparent communication.

Many reasons that participants cited for their lack of open, transparent communication, such as shortage of time or lack of focus, could be addressed with a family governance plan outlining regular opportunities for information sharing, open discussion, and fun. A plan helps families facilitate important dialogue, provide clarity, and create trust.

At the Forum, each family created specific governance plans that were appropriate for their circumstances and established timelines for improving their family’s communication. Most families’ primary goal was to host their first family meeting within the six months following the Forum. During the final session, families shared their goals with the group and committed to reporting back to one another at next year’s Forum.

Using family governance as a tool to increase open, transparent communication:

1. Know when to seek professional support. Some reasons for lack of communication, such as long-standing family disagreements or certain dysfunctional behaviors stemming from mental illness or substance abuse, will need focused attention by experienced professionals before attempts to improve communication can be successful.
2. Determine what governance structures and practices are most useful for your family’s size, stage of development, and temperament. Giving all family members a voice, learning how to work together, and building trust are more important than the governance structures or policies themselves. Each family has to determine what path works best for them – and be open to making changes as the family grows.
3. Recognize that family governance is an on-going journey. Family governance will not happen overnight – nor should it. Select a few elements to address first and proceed at a pace that allows for adjustments and family input along the way. The active involvement of each family member is more important than rushing to put a plan in place.
4. Begin by celebrating the ties that bind your family together. Many families choose to begin the family governance journey with a focus on family values. Talking about values is a great reminder of a family’s shared heritage.  It can provide opportunities to talk about previous generations and the sacrifices they made. Senior generations may want to share family lore and talk about the origin of the family business.
5. Set realistic goals. A family embarking upon this journey should set realistic goals (maybe addressing one to two family policies per year) and start with easier, less emotional policies, such as a code of conduct.
6. Have FUN! Fun is key to building the relationships that will sustain the family over the years, and it will increase the chances that the family views family meetings as enjoyable and not just a burden to be endured.