Christian Mancier, Corporate and Commercial Partner and Joint Head of the Family Business Team at Stockport’s Gorvins Solicitors, shares his insights into what makes a successful family business.
I recently attended a Family Business forum where I heard a number of family firms talk about some of the issues that have affected them and how they addressed them.
Whilst listening to the speakers it became apparent to me that the theme of communication was a common thread across the board and that whilst many people think of communication as something that should be done between family shareholders, communication impacts on almost every aspect of a family firm.
Communication between board and shareholders
First and foremost there needs to be communication between the board of the family firm (which may include non-family board members and non-exec directors) and the family shareholders.
The board need to understand the needs of the family shareholders vis-à-vis long terms views, direction and family wealth creation so they can manage the business on a day-to-day basis through executive control to achieve these aims instead of being at the whim of the shareholders where businesses operating at the whim of family shareholders are often uncertain and reactionary.
Working with external advisors
The directors need to communicate between themselves and their non-executive directors/mentors. Non-executive directors (or external mentors) can add significant value to family business but only with open lines of communication with the executive family shareholders.
Professional advisors have a significant role to play in supporting family firms from a day-to-day operational compliance basis through to adding significant value on more strategic pieces of work. Advisors can often assist in starting those notoriously difficult conversations that are always the “elephant in the room” in family firms – conversations such as succession planning. However, those best relationships with advisors often come about from firms who are open and communicate with their advisors on an on-going basis and see their advisors as part of the team.
Communicating values and culture
Whilst most of the communication is focused at management or ownership level, one of the most important aspects of any family firm is its values and culture and the only way that values, culture and vision can be instilled in any organisation are through great communication where culture, values and direction is communicated to every member of an organisation from the board room down to the shop floor.
Communication can take many forms such as meetings, presentations, forums, newsletters and away days taking groups away from their day to day environment. Ultimately there is no right or wrong way to communicate and every family firm will communicate in a different way which works for them, however, the key is to make sure your family firm communicates and communicates at every level with every employee, director, shareholder, family member and other interested stakeholders.