Key Questions for your Family Business Charter
A family charter is an important guide to ensure that a family business and its members are aware of what’s expected from each member, as well as the rules that will guide them. A family charter will assist in governing the organization, solving problems, resolving conflict and making decisions. Additionally, a family charter may consider succession – who will take over leadership – as well as who is allowed to govern the family business. For these reasons a family charter will require honest and thoughtful conversations to truly serve the family and the business.
This video covers the important steps in creating a Family Charter and how to keep your family charter relevant. If you would like more in-depth information on how to set up a family business Charter or would like help in any other aspect of running a family-owned or closely held business, please contact us.
0:00 Hello, today were going to talk a little bit about the value of a family charter.
0:06 You know, one of the biggest challenges in any family business is communication. Trying to make sure that everybody is on the same page that we’re all in agreement with what it is that we’re trying to achieve and how we’re going to get there. A family charter is a simple document that provides an opportunity for family members to come together and to talk about some of these important issues. On our website, you will find a document that outlines some of the key questions. Let’s talk a little bit about those today.
0:36 One of the things that you might want to consider, is it important for your family to determine what its mission or vision is? What are you trying to achieve as a family and what are you trying to achieve as a family business? Maybe those are one in the same, or maybe they’re different too. Some families have a strong feeling about the community and being able to give back. Family businesses often find it useful to sit down and talk about how they’re going to work, is around hiring family members.
1:09 Who gets a voice at the table, how should family members be involved in the business? Does everybody get a job just because they’re family or do they need to earn their way in? What is that going to look like? And if you allow people to come into the family business, what constitutes good performance? What is the type of organizational culture will you like to have in our family business? How do we want to be able to work together? How are we going to give each other feedback? What’s that going to look like?
1:39 We might also include in the family charter information around succession. How are we going to identify leaders in our family business? Is it only open to family members? Or are we going to bring in outside talent that might help us to grow the business? And when it comes to succession planning, what are some of the competencies that are going to be important? And how again are we going to give each other feedback on that? How are we going to support our family members?
2:08 I mean think about your owners at the moment. They may not want to be there forever, so if they would like to transition out of the company, what does that mean for the family? How are you going to support these family members as they move into their new lifestyle? Other areas that are sometimes important in the family charter is how often you are going to come together and for what reason. Are you going to have a family council that makes key decisions on behalf of the business or are you going to leave that to a board, a fiduciary board or an advisory board? What sorts of family traditions are going to be important and at what point do you want to separate out what happens in the family and what happens in the business?
2:51 A family charter can cover a lot of ground, these are just some of the very first questions you might start to ask. For more examples, please check out the website. And if you would like some help in forming this really important document, feel free to give us a call.
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