Take Your Family Council to the Next Level of Performance

July 23, 2019

By Amy Castoro, President & CEO of The Williams Group

 

We recently worked with a family council that was stalled on policy design and growing increasingly frustrated with their lack of inertia. They spent weeks creating needed policies for health care, education and venture funding, only to discover they did not have the authority to implement them. In some cases, other family members ignored them entirely.

Resentment and resignation were gaining momentum, while council participation was waning. Blame was taking over, gossip was increasing, and productivity and confidence in the council were declining rapidly. A lack of attention and structure threatened the boundaries of entitlement and individual engagement. The family worried that the significant wealth in their family would overrun the family values and derail individual motivation, purpose and willingness to contribute to their wealth.

Given these conflicts, the likelihood of the council continuing to be a support structure for future generations was in jeopardy. But thankfully, the family came to us when they realized that if nothing changed, their council would dissolve. When that happens, it can threaten the family’s wealth and relationships.

When the council was originally formed, it was charged with the vital role of setting policy that outlined the boundaries of entitlement and accountability for a large, affluent family. Up until this point, they had established a number of helpful guidelines rooted in strong family values.

For example, for a family value of self-sufficiency, they established clear guidelines for the role of a beneficiary who would foster accountability and contribution. Other examples of family roles that emerged from their values included family council representative, philanthropist, investor, business owner, trustee, executor, family liaison and historian. Each of these roles was assigned specific qualifications, standards and measurable outcomes.

 

When roles collide

 

As is often the case, the family hit a roadblock when it came to creating a policy for health care. After long days and intense discussion, the council created a comprehensive policy for health care that gave family members generous coverage while also encouraging individual accountability.

The head of the family and wealth creator, however, learned that a family member was being denied coverage and overrode the policy to provide that person with additional support. The council members found themselves confused and frustrated that they had all deeply committed to their charter to protect the boundaries of entitlement and accountability, only to have it swiftly undone by the actions of the head of the family itself.

The council was eager to keep the wheels of family harmony moving, foster continued individual growth and operationalize essential family values. They had commitment within their team, a good working foundation, a shared vision and a clear mission. What was missing was clarityin their decision-making and authority roles. Their impliedauthority as a council did not align with the actualauthority of the family leadership.

As the council grew in effectiveness and size, decision making was implied but never specified.

What could have become an irreparable family divide was repaired because this family recognized it needed help and sought our assistance. Through open and honest dialogue, the family council gained clarity regarding the respective roles of the family leader and the council. They established levels of decision-making authority, and they identified where flexibility was required and where the council could hold firm in its decision making.

In this case, it wasn’t the policy that needed clarification as much as the role of the family leader and his decision-making approach in relationship to the council.

 

Roles on a high-performing team need to be clear

 

In some families, it’s impliedthat family members will eventually hold a role in the family business. Family members often learn what the standards of performance are simply by observing what was happening while they were growing up.

For example, family members in wealthy families might have learned that it was important to look busy, represent a certain air of authority and oversight, and avoid upsetting the senior family members. Or they might have learned that it was important to have the “right” last name and to be born the “right,” or preferred, gender.

Having to guess what your role is in a family isn’t healthy for anyone. Without clarity of the roles, standards of performance and expectations of qualifications, family members perform blindly in high-stakes roles, and their family name and personal identity are on the line. This is not a formula for success for a high-performing team.

For example, let’s look at the common role in a family council of investment committee member. The purpose of this role might be to become more astute in how investments work and to generate additional wealth. The standards of performance might be to bring three possible investment recommendations to each meeting. Expectations of qualification might be that the family member in that role is at least 16 years of age and attends a financial boot camp.

When you identify the purpose of each role in that way, the standards of performance and the expectations of qualification, it’s much easier for family members to choose a role they want to fill. It’s also much easier for them — and their family members — to know whether or not they are succeeding.

 

Steps you can take now to elevate your council to the next level

 

If your family council has experienced any of these common obstacles to harmony and high performance, here are some tips for gaining clarity about what’s expected of everyone involved.

 

  1. Focus on the roles, not just the policy. As you define policies, also focus on the role of decision making. Specify the kinds of decisions the council has authority to make and which decisions are outside their purview.
  2. Declare the standardsof performance, qualifications and expectations for each position on the family council. When you establish clarity and formal guidelines, council members are provided with the essential mile markers to find their way to successful contribution as members of the team. Hold an annual meeting to assess the performance of each council members. This will help further clarify shared standards.
  3. Open and honest communicationis essential in every role. Create a culture in your family council that has a standard of sharing assessments of each other and the processes openly and honestly. At the end of every meeting, pause and reflect on what worked well in the meeting and what would be even better next time.

 

Specifying and creating clear standards of expectations of performance of roles allows the entire family team to function well together. In all high-performing teams —whether in sports, organizations, the military or families — everyone has a role. Taking time to define each team member’s purpose, standards and qualifications minimizes the opportunity for the resignation and apathy that can develop when people are unsure of how, or if, their participation matters.

 

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