Having a proper governance structure is essential to the succession process for family businesses. The lack of proper communication channels is often the root of much of the conflict during both the management and ownership succession processes.
There are two governance structures that are necessary for the proper flow of information and communication.
- Family Business Meetings – This only includes active family members
- Family Council Meetings – This includes the broader family
These two governance structures will keep the business and the family well-informed, which will lead to better decision-making for all parties. It can be argued that a Family Council Meeting should only be held once effective Family Business Meetings can be held by the active family members. However, this may not be the case for all family businesses.
The family business meetings and family councils are governance structures that can be implemented to increase the comfort of the current owners and help groom the potential successors all while keeping honest and open communication between the family and the business.