Establishing a Family Council

Establishing a Family Council

The Jim Moran Institute for Global Entrepreneurship

As the family business grows there are necessarily more people involved and there is a requisite need for more formal governance structures. The family council is one such structure that can be effectively utilized to provide a forum for family communication and clarification of business decisions. Why is this so important? Communication in any organization is important to convey information and to promote understanding. In a family business there are just too many issues pertaining to both family and business to leave them to chance meetings. By establishing a family council, family business members recognize that openness and involvement, and sharing of ideas is critical.

This does not mean that family businesses do not communicate. The problem is that communication is often selective, with only a few family members involved. Consider the following situation where the daughter of an entrepreneur is given a management position in the family business upon graduation from college. However, when the son graduates from college he has to take a sales position before being considered for management. He has two options: not say anything and build resentment or risk alienating his sister by speaking to another family member. Oftentimes members of a family business incorrectly assume that the only way to keep the peace is to avoid talking about issues that are upsetting to them. If a family council had been established, the family member would have had an effective forum to discuss the situation and family members could address the underlying issue which is the need to establish employment policies for family members who enter the business. A critical task for the family council is to develop and recommend policies to the BOD that deal with issues that concern both the family and the business . Another critical task of the family forum is to clarify business decisions. For example, family members may be concerned about the owner’s decision to eliminate several positions in the company. Family members may not be aware that the company has lost a major account. The concerns of family members could be dispelled if the owner shared this information at the council meeting. More…

Why is the Top of Jim Coghlin’s Head Shiny? Because He’s a Bright Guy

Why is the Top of Jim Coghlin’s Head Shiny?
Because He’s a Bright Guy

To not only let a 112-year-old family business prosper, but to increase sales volume by 20 times, you must be doing something right.

Jim Coghlin has grown the Worcester-based Coghlin Companies from $3 million to $60 million in his 30 years with the firm.

Coghlin stressed the importance of mentoring: not only from family executives, but also from an outside board and groups like the Young Presidents Association that let newer managers “Bare your soul in confidential high-level discussions.”

Now, with two of his own children in executive positions within the firm, Coghlin sees more of his role as mentoring them. Some of the lessons he tries to pass on:

  • Divide your days into focus days–8 of 10 working hours dedicated to a task–buffer days for catching up on administrative tasks, and free days–mini vacations just before a focus day.
  • Pursue three 90-day goals at a time.
  • Concentrate on high-payoff activities to achieve those goals. For instance, when setting priorities for customer contact, go after the one that will result in the largest check.
  • Spend as much time as possible in the field (Coghlin doesn’t have an office, only a meeting room).
  • “Delegate everything except what is your genius”–the part of your work that contains your passion, and that others can’t do as well.
  • Build key relationships. If there’s conflict, ask the other person, “‘What has to have happened in three years to make this relationship successful?’ If they don’t answer, they don’t trust you. If they do answer, you know exactly what has to happen.”
  • Finally, keep your commitments–be someone others will trust: be on time, do what you say you’ll do, finish the tasks, and say please and thank you.

Reprinted with permission of the UMass Family Business Center, online at http://www.umass.edu/fambiz.