Family Business Essay

Family council A family council Is a governance body that focuses on family matters, frequently developing family participation policies, and dealing with liquidity Issues and estate planning family council benefits are -promote communication -provide a safe harbor for the resolution of family conflicts -support the education next generation family members about family dynamic and ownership issues Boundaries The family council and board of directors are separate Dillon. Therefore, two of them still relate to each other At annual shareholders’ meeting, the board of directors is elected by the family.

Family members exercise their responsibilities as shareholders and are informed of company performance, returns on shareholders’ equity, and dividends to be distributed. Board of directors Board of directors Is a legal entity Board of directors can come from family and non-family employee The requirements of a director based on: his / her reputation competence willingness to serve on the board highly qualified candidate To be a board of directors, the employee should come through the Management- top management – CEO – and broad directors The primary responsibilities of a board of directors include : Set the company strategy

Looking out for shareholders ‘ interest Ensuring the ethical management of the business Being a respectful critic of management Reviewing CEO performance Advising the CEO Bring fresh perspective issues Assisting on the succession and continuity process The Family constitution is a statement of the principles that outline the family commitment to core values, vision, and mission of the business that shareholders will follow in their relations with each other, other family members, and company managers.

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Components The content of family constitutions is different depend on the size of the family or the tags of development, and the involvement of family members in the business. However, a typical family constitution will cover the following elements: – Family values, mission statement, and vision. – Family institutions, including the family council, the education committee, the family office. – Senior management. Authority, responsibility, and relationship among the family, the board, and the senior management. – Policies regard to family members’ employment, transfer of shares, CEO succession. Why should we have one? A family constitution provides a formal link between business matters and family affairs. As a result, it facilitates communication between the family, the owners and business managers. From that the family business evolves and successive generations enter the business.

It leads to: The expectations of the business held by these individuals begin to diverge. As the business expands, it makes increasing financial and management demands on its owners A family constitution helps the family deal with these changes constructively. It requires the family to think about important decisions before they have to be made and to find agreement on important family and business goals.