January/February 2017 Openers
Ask the Experts: Should council members apply for positions?
We have been working on enhancing the role and responsibilities of our owners' council (family council), along with identifying the set of skills required to serve as a council member. We hope to draft an application and job description for owners' council membership. Do other families use a formal application and job description to select owners' council members? What key points should be included in these documents?
Advisers' and family members' replies:
One of the greatest challenges facing a family enterprise as it crosses generations is to help the next generation learn that service on the family board or council is not a prize or an honor, but entails a responsibility and a level of competence. Young family members are eager to participate, and a generative family should honor and support that desire. Yet prospective members of any family governance process need to be not just committed and available, but also capable and knowledgeable.
In addition, younger family members, who have grown up in the family but who are relative strangers to the world of business, may have trouble separating the fact that they are family members from their responsibility to be informed, educated owners as they inherit ownership. As effective business families transition to third-generation leadership and ownership, they create an educational program that helps young people, and sometimes those marrying in, to learn about the family enterprises. Some families anticipate this need by offering programs that they call ownership education for their young people, to combat what they feel is a possible entitlement mentality that can arise in wealthy households.
Potential roles in family governance might include serving on the family council, on the foundation board, on family committees and even as trustees of family trusts. Each one of these bodies might need candidates and might be open to family members who are ready, willing and, most important, prepared and able.
Family enterprises also should define exactly what is needed to be responsible participants in governance activities and members of various family councils and committees. The requirements for service on a family council are different from those for service as a board member, as an adviser, as part of a family committee and as a trustee. Families that have large assets and complex business and family governance find that in order to operate, the best people must be prepared to enter responsible positions. The family itself must create educational programs.
Since membership on an owners' council entails serving as an adviser to what can be a large and complex enterprise, the family is wise to define clearly what the requirements are for service. While young family members see the rewards and benefits of ownership, they are not really aware of the accountability to each other that they have as owners. The family elders might define how a forward-looking family member can prepare for such a role. Some families set up internships, or mentorships with an experienced owner or, perhaps, a period of serving as an observer before someone can become a full member of a board or council. The key is that the people who are "on" a council must agree to be informed and capable of understanding and making decisions. Family members should not be competing for roles, but rather preparing and readying themselves.
It seems very businesslike to have a position that must be applied for, but in fact, this helps young family members realize that that is not a family entitlement. Every family service position should have a job description stating what is expected in terms of commitment, and also the skills and competencies that are needed in the job. It might also suggest how a family member can prepare for such a role. The job description might explain how people are selected, and when this is done. The owners' council might name a recruitment and family development committee to write this description; inspire family members to step up, declare interest and develop their skills; and then begin a formal process of application, interviewing and selection.
Dennis T. Jaffe, Ph.D.
Wise Counsel Research
We recently drafted a job description for our family council chair that outlines all of the work of our family council as if it were to be completed by one person. In developing the job description, we initially envisioned a formal application process to hire a single council chair. However, we have found that this model does not currently fit our family, and we have seen the work divided (along with compensation) in various ways, depending on the skills and available time of our members.
We worked on this document for a year, primarily in a committee. We started by generating (and agreeing on!) a list of ideal council chair attributes and requirements, formalizing the council's scope of work and considering how to remain flexible with both the selection process and the division of responsibilities.
In the same way, we outlined the responsibilities of all council members. We have since transferred this information to an orientation document for new members, and it purposefully remains general. We have arrived at a model that encourages family members to participate in and rotate off the council based on their availability rather than hiring a single family member to run the council indefinitely. Each year, the council members discuss and realign their roles and responsibilities on the council, which allows for changes based on what is happening in their lives and the projects we are working on.
We continue to work on ways to evaluate ourselves in a positive, non-divisive manner. We see this as an important part of maintaining a healthy, productive and always-improving leadership.
Smith Family Council
First, a note of caution about processes and documents before looking deeper into family council application and membership processes: Do not be overwhelmed; this does not happen overnight!
Lessons learned from Port Blakely Companies' Eddy Family Council:
1. Give yourselves time. It took eight years before our constitution was "finished."
2. The process is more important than the product. We recently found three drafts of our family council handbook written in 2008, 2010 and 2012, so after 16 years of family governance, our goal is to finish a strong document this year.
3. Follow what you set in place. Tweak it all occasionally, but read the documents and follow them. As our former human resource vice president stated, "It's not the glitzy fun stuff, but now we can turn to it for guidance."
In our family, the family assembly consists of descendants from the three original owners, adoptees and married-ins (currently about 140 members). Anyone over the age of 21 is eligible to be a family council member. They are elected by the family assembly according to the procedures set out in the constitution and the family council handbook. The family council is composed of nine members, each elected for three-year terms, with one-third elected each year. The constitution lists our criteria for candidates: (1) time availability, interest and commitment; (2) a representative balance of branch, age and gender; and (3) additional skills learned from education and work in the legal, business, educational, administrative, communication or event planning fields.
The application process begins when names are suggested to the council's governance coordinator. Any family member can suggest a name. Each applicant receives an application packet with three documents: The Family Council Applicant Information Sheet, an Applicant Profile Form and a Family Council Membership Agreement.
The Applicant Information Sheet provides an overview of family council details. It has three parts: the mission of the family council, the criteria for candidates and a brief description of the work of our four family council committees (Governance, Education, Communication, and Meetings and Planning).
The Applicant Profile Form requests contact information (home and work); names of the applicant's spouse and children (and children's ages); information on the applicant's educational background; and a list of the applicant's hobbies, skills and interests. In addition, the applicant is asked the following questions: What skills and abilities, both personal and professional, will you bring to the Council? What would you like to see the Family Council accomplish in the next three years? What are your current and past board memberships and volunteer commitments? Do you have any previous work or study experience related to Port Blakely's business activities?
Our Family Council Membership Agreement is reproduced below.
The returned applications are collected, reviewed by the family council and mailed to the members of the family assembly with a ballot. At the annual meeting, ballots are counted by a non-family employee, and the results are announced by the family council president. After the election, all new council members participate in an orientation seminar with the family council president and Port Blakely staff. This seminar includes an overview of the history of the family council, an overview of family council work, a review of the family council documents and clarification of expectations and information on the family council committees. The orientation meeting ends with a discussion concerning the area in which the newly elected members would like to work.
The 16 years of our family governance have seen ups and downs and fits and starts as well as periods of smooth operations. From the family council members' application process to the final thank-you ceremony, the work of serving the family provides valuable experiences in family business and board leadership. Family governance is work, but it is work that transforms a family connected to its business into a true business family.
Charlotte E. Lamp, Ph.D.
Shareholder, Port Blakely Companies
Founder, Rockwood Consulting LLC
EDDY FAMILY COUNCIL MEMBERSHIP AGREEMENT
I, _____________________________________________, understand that the Family Council meets at least four times a year for two- to two-and-half-day sessions, with additional teleconference meetings. This does not include the annual Family Assembly. I understand that I am expected to attend all meetings. I will put them on my calendar.
I have the time, the commitment, the interest and the desire to participate on committees that may require extra time and effort outside of scheduled meetings.
I will respect the confidentiality of discussions with members of the FC.
I have read, understand and support the Mission Statement and purposes of the FC as stated in the Informational Packet provided for me by the Family Council Governance Committee.
I agree to read all material prepared for me before coming to meetings.
I will strive to represent the interests of the whole family assembly, not only my personal interests or those of my family branch.
I understand the basic principles of cooperative conflict management, and I appreciate the necessity of applying them in family and family-business relationships. I promise to apply them to the best of my ability in my role as a Family Council member.
If I find I no longer have the time, interest or commitment to fulfill my responsibilities as stated above, I shall offer my resignation so that another person may take my place.
Signed _____________________________________________ Date _____________________________________________
Start by having clearly articulated job descriptions and a formal application process for councils. One important distinction is that ownership councils address matters of ownership, while family councils work with more family-related matters, so there may be specific requirements for each council. Some families may mix these responsibilities. In either case, these councils are the primary governance structures in business families, and treating them with a high level of professionalism helps achieve their full potential. The more forethought that goes into forming the team involved with your respective council, the better the results will be.
The job description for serving on the council guides the application process. Some key points to consider including in the job description are:
• A clear statement of the purpose for the owners' council. You need to articulate the purpose to guide the overall function of the council, and to let people know what the goals of serving are.
• Expectations for the time commitment involved on a monthly and yearly basis.
• Standards for communication and interaction as a council member. This is a leadership position, and members will serve as role models to the entire family.
• The desired credentials, experiences and personality traits of members.
• Compensation (if applicable).
The formal application process should aim to ask meaningful and provocative questions of candidates. You will need to learn about people's experience and also dig deeper into why they want to serve. No one has a degree in "family council," so you will want to assess the candidates' capabilities that make them an asset to the council. Because family councils have a highly interactive, generally non-hierarchical structure, you want people who can appreciate different perspectives and will work well together to achieve consensus as a team.
Key elements to learn about and ask of potential candidates:
• Educational background.
• Job experience.
• Prior leadership and board/council experience.
• Specific skills they have that are beneficial to serving on the council.
• Why do they want to serve on this council?
• How do they deal with adversity?
• How do they react when they do not get their way in a decision?
• Have they ever worked with someone whom they disagreed with? How did they reach a compromise with that person?
• How do they manage themselves when upset?
• What are their personal values?
Governance councils achieve maximum effectiveness through a mix of clearly articulated intent and consistent engagement from people who truly want to do the work involved. An ideal council has a diverse blend of people with complementary perspectives who can work as a team for the good of the entire family. Having a professional job description and formal application process will attract family members who are able to fulfill the responsibilities of the council.
Joshua Nacht, Ph.D.
The Family Business Consulting Group
I would discourage the use of a formal application to gain entry to a family council. Family councils should be inclusive in nature, not exclusive. The best family councils are those that open up their doors or cast a wide net. These family councils intentionally welcome engagement from the family at large. Of course, entrée to a family council can and should be mentioned in the council's charter or the family constitution. Guidelines might include a minimum age for members, number of meetings and term requirements.
While I don't find an application to be necessary, I definitely condone family council job descriptions. They are a great way to explain the specific requirements, processes and committees that make the family council work. Job descriptions can inspire and foster engagement. They clearly communicate the characteristics of the job and the skills required.
I would encourage family council members to write their own job descriptions. How do they see themselves contributing to their family council? Somehow, I get the feeling that a job title like "Chief People Officer" might have come from a creative job description that took off. Whatever inspires or motivates a family member, the family council is the place to fulfill it.
A job description should be very clear about the task(s), expectations, compensation and accountability. Specific job descriptions dovetail nicely with family council documents that communicate the path to leadership.
Explain the governance leadership positions in the family and in the business. Create a leadership model, a grid, key benchmarks or all of the above. But be clear when you spell out the responsibilities and the roles that come with leadership. After all, the family council is the best way to develop and position family members to serve on the board of directors of the family business. Your team and its leadership are the vehicles for taking action on the issues that matter for the family and the business.
Ashley C. Levi
Family Council Consulting
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