The Family Council has a Policy-setting Role

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What a Family Council Is, and What it is Not
 
A Family Council Is a separate entity from the Board of Directors and management that represents shareholders. It IS NOT authorized to tell management or the Board of Directors what to do. It is important to consider the authority that is granted to the council and to document it in a family charter or family constitution so that everyone has clarity about the extent of the council’s authority (Guide).
 
Organizing the Council
 
Format:
 
Research on family council effectiveness indicates that families benefit from having an outside facilitator. An impartial consultant guiding the process can improve productivity and diffuse conflict. As a result, Council members are more likely to follow through on decisions and action items. This can be a major turning point for leadership if historically one or two people have been making all the decisions (Alderson).
 
Structure:
 
Steps to establishing structure and order:
 
1. A charter that includes the mission, vision, values, goals, membership requirements, governance, agreements and policies.
 
2. Leadership and committee organization.
 
3. Channels of communication.
 
4. Financial strategy and/or budget.
 
5. Definition of relationship to other organizations and authority.
 
(Guide)
 
Membership:
 
Ideally, the Family Council leader should not be the company leader. The gathering should be business-like in even the smallest Family Council. A family member will be elected the Chairperson position with the post rotated every two years (Guide). With each passing generation and succession cycle, the size and complexity of the family grows presenting the need for a formal democratic voting process.
 
Based on the broad definition of family, it is advisable to be more inclusive by having family members who are not shareholders or employees, most often spouses, children over the age of 14, and other recognized individuals be allowed to participate. Inclusivity can diffuse conflict (Guide)
 
The Cathy family: a succession success story.
 
Once a month, all third-generation Cathy family members of the Chick-fil-A restaurant chain participate in a conference call. These distant cousins share news and foster a sense of community so that when they take over the reins, they have a powerful connection based on more than just the family business.
 
Setting the Agenda
 
The Council leader should present an agenda for each meeting to ensure that discussions stay on point. Some issues, such as the financial status of the firm, the performance of management, and succession planning are ongoing, and should always be on the agenda.
 
The Family Council has a policy-setting role, although its place is subordinate to the Board of Directors (Davis). Items are presented, discussed, and then voted on. An example would be the family council drafting a policy concerning the standards and process for employing family members, and then pass it to the board for discussion and approval. The Council should primarily focus on family issues so that the board can focus on its other important duties. Minutes should be recorded to ensure continuity and follow-up.
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