Consider the needs of passive stakeholders
Passive family stakeholders (family members who are not employed by the business) frequently have a minimal voice in the management of a family business. They often feel "trapped," with no control of the business and no meaningful options to get out. This complicated situation often sets business interests against personal ones; e.g., capital for expansion vs. a passive shareholder's financial needs.
Helpful passive stakeholder strategies include:
• Electing one or more passive stakeholders to the board of directors (in addition to the family council).
• Naming an appropriate and representative passive stakeholder as the board chair, to provide more balance and foster communication between active and passive shareholders in decision-making processes.
• Inviting stakeholders who are not board members to attend board meetings (apart from executive sessions).
• Encouraging passive stakeholders to attend company outings, special events, award ceremonies, retirement parties and other company social events.
• Regularly sending financial reports, business plans and other communications to passive stakeholders.
• Avoiding discussion of business matters or issues at family outings; or if it happens, including passive family members in the discussion.
• Avoiding any action that makes family members feel like "second-class" participants in the business.