Family Constitutions and Family Agreements
Family Constitutions, which are also called Family Agreements, are formal documents, developed collaboratively by family members to encapsulate the values, beliefs and objectives of the family, as a family, with specific reference to the family's relationship to and dealings with its family business.
The Constitution also supports the work of the Family Council and realistically, neither can be properly implemented without the other.
Family Constitutions should never be used as a primary response for resolving problems in family businesses. In the same way a contract records an eventual agreement between parties, so a Family Constitution should be the outcome of agreement, not the mechanism used to cause agreement.
Nevertheless, the very exercise of having the family work collaboratively to record their common goals and make mutual commitments can have a powerful healing effect on a family suffering with serious problems or conflict.
Developing a Family Constitution
Developing a Constitution is an exercise in deep reflection on the very essence of the family, the complex relationships within it and the relationship of the family to its business, both now and in the future.
Constitutions are usually developed at fully facilitated retreats run by experienced Solutionists. They usually last between one and three days. Going "off-site" is both a practical measure to get away from the distractions of the business and a symbolic move intended to emphasise the separation of family and business.
A successful program enhances self-awareness for family members involved in the process and clarifies, or reinforces, their sense of position in the family and the business. At the same time it forges and strengthens the bonds that hold the family together - the bonds and commitments that make the family unit a formidable force in business.
5 Stage Process
The process has five main stages. Each is facilitated by an experienced Solutionist:
- Stage 1: Preparation / Factfinding. The process begins with a series of interviews with individual family members (or, more usually, with spouses and partners). These meetings are designed to achieve four things:
- Ensure that the chemistry is right between family members and our Solutionist Facilitator.
- Explain and obtain commitment to the process.
- Gather comprehensive background information about the individuals, the family and the business .
- Ensure that the family dynamics function sufficiently well as to allow the process to proceed with strong prospects of success.
- Stage 2: Visioning (optional). If the Stage 1 process demonstrates that the family has an adequately clear and shared vision for its individuals, the business and the family, we proceed straight to Stage 3. If not, we conduct a half or full day retreat to help the family develop such a vision for themselves, the family and the business. In preparation for this meeting we provide family members (and their partners) with a series of "deep reflection" worksheets to help them get their minds into the groove and into the key issues they need to address in advance of the creative process of developing a vision. For further information on this process, follow the link to Visioning on this website.
- Stage 3: Preparation / Pre-Thinking. We provide the family with suggested main topic headings for their Constitution and with notes directing their thinking towards possible content under each heading (see below).
- Stage 4: Develop the... Family Constitution. This occurs at a retreat using a fully facilitated brainstorming process to develop content. Depending on the size of the family, the nature of their family business and the type of Constitution they require, the process usually takes 1 to 2 days to develop an initial draft.
- Stage 5: Finalisation. Another day is usually required to finalise the draft. This can be tacked straight onto the end of Stage 4 to complete the process quickly, or it can be done sometime later, after the family has had an opportunity to consider and comment on the draft document they have produced.
Alternatively, the family may elect to manage their own finalisation process to emphasise their ownership of the document. In this case a strict timetable is set and one family member will be appointed to be in charge of finalising the document. They will be empowered to call on others to help, or accept volunteers. Our Solutionist remains on call to help at any stage in this process. It is very important to have a ceremony at the end for all relevant members of the family to recognise, celebrate, commit to and formally adopt the new Constitution.
Typical Contents
The content of a typical Family Constitution is as follows:
- Background
- Our Core Principles
- Definition of Family Members
- Family Objectives
- Family Values
- Achieving a Balance between the Family and the Business
- Non-Family Directors, Managers and Workers in the Business
- Code of Conduct - Expected Behaviours
- Family Council
- Family Forum
- Entering the Family Business
- Succession Issues
- Preventing and Resolving Conflicts
- Confidentiality
- Covenant to not Compete
- Updates and Amendments to this Constitution
Benefits of Family Constitutions
Constitutions "lock in" family commitment to the future and support the ongoing work of Family Councils .
A formal, written Constitution defines and prescribes the relationship of the family to the business (and vice versa) through the medium of a set of agreed, relatively objective rules. It is recognised that these rules were established through a process and at a time when the family was functioning constructively as a competent, rational, mutually respectful unit.
These rules are permanently available for use as a frame of reference for preventing and resolving potential future family : business issues.