Who is Family?

Over the last 15-18 years we have been working with family businesses in New Zealand, Australia and the US, helping them create and write their family charters. We’ve learnt a lot about how to get the best outcomes for our families.

There are two broad ways of writing a family charter;
Write the charter with the family in the room going through a detailed template of issues.
Interview family members and then, using that information, advisors write the family charter and present it back to the family.

At Family Business Central we believe in option 1. Getting the whole family in the room around a table to discuss the issues and make decisions as a family. This is the best way to get a well written, owned, family charter. While we clearly think this method is the best, it has its downsides. Firstly, the logistics of getting everyone in the same place at the same time for up to 5 separate days of meetings. Secondly, it takes time for all the family members to think about and discuss the incredibly important issues that need to be addressed.

On the upside, this process builds massive ownership of the outcomes, the document and the decisions made within it. Because everyone is involved and has been part of the discussions, there is a real connection with the document as a whole. They completely understand the language used because it is literally in their words.

However, to start the process, the first question that has to be answered before we get anyone in the room is:

“Who is family?”

It sounds like such a simple question, doesn’t it? We think we know the answer but in reality it takes a bit of time and thought.

Ask yourself, who in your family do you want to have sitting around the table discussing the details of your family business, your family’s affairs, succession of the business to the next generation, the way the family manages money, investments and philanthropy? Who are you comfortable, not only sharing and discussing this information with, but allowing to be part of the decision making around the policies on these issues?

Does it include:

• Spouses?
• Partners of your kids?
• Your kids—if so, at what age?
• Step kids?
• Adopted kids?
• New partners of family members?
• Kids (from another relationship) of new partners who are now with family members?

These are not simple questions, they take some thinking through. Each family is different and has different tolerances for who to involve – particularly around privacy, money and the business.

One family we worked with very much wanted everyone to be involved – including their daughter’s boyfriend of two months. I quietly took the parents aside to ask them if they really wanted to do this. Upon thinking this one through they decided that the kids’ partners were welcome as long as they had been together for 5 years or longer. It turned out that at the 4 month mark, the daughter and her boyfriend decided to call it quits anyway.

Another family initially did not want to include the partners of their children in the meetings. After discussing it and thinking about the implications of two partners not being invited to an ‘all family’ meeting, all the while knowing that important family matters were being discussed without them, the family changed their minds and included them. The result was amazing – a fantastic family charter and a family who through the various conversations became closer and more united as a result.

We had to ask one family whether the adult kids of a new partner to one of the kids were to be invited to the family charter meetings. Were they ‘family’? The family was very clear, they were to be included and, again, the result was excellent.

At the same time there is a reality that some issues will be decided ahead of time by the founder or current generation. There may be some issues that they wish to make decisions about before the whole family comes in – this is their prerogative; it is their family and their business. We discuss all this with the current generation before we get the family in the room and start the first family meeting.

This is where our expertise in managing the process, relationships and difficult conversations in a family comes in. We know what to ask, to whom and when.

There are no black and white answers here – each family is different, however, it is important that families ask themselves these questions, debate them and think through the implications carefully. Often families don’t do enough of this ‘pre-thinking’, or really think through the ‘pros’ and ‘cons’ of certain decisions, which can make things very difficult later on. It’s just like writing a family charter — there are many important issues to discuss and think about, and they all take time to come to an agreed answer. The benefit is that, though it takes time, when an agreement has been made, there is huge buy-in by all the family.

Get in touch with Philip today at philip@familybusinesscentral.com for more information about how to develop your family charter.