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Helping Family Businesses
Prosper Across Generations®

Creating Successful Decision Making Groups

  

By Jennifer M. Pendergast, Ph.D.

 

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So much of the wisdom on success in family business deals with taking the personal out of business. Family councils are created to provide a location outside the business to address the needs of the family. Family employment policies are created to ensure that family members are treated objectively in the hiring process. Independent directors are added to the board, in part, to ensure the boardroom conversation focuses on business rather than family issues. 

Yet businesses are made up of people. And people need to work together to make the decisions that determine business strategy and operations. Interpersonal dynamics can't be ignored or avoided by the simple creation of rules or policies. While policies serve a purpose for clarity and shared understanding, if they are created in the absence of basic trust or in the context of fundamental underlying disagreements, they will not likely prove very effective. What we have found is that stakeholders have to invest time in truly getting to know and respect one another's concerns and priorities before they can effectively make decisions as a group. 

Consider the following example: a newly constituted board of directors-comprised of the retired business founder's wife, the founder's son and CEO, two non-employed shareholders and four independent directors is preparing to meet for the first time. In most cases, the agenda of a first board meeting is designed to educate the board members about the business, financial performance, customers, and the industry in which the company operates. In this case, the meeting was designed to ensure that board members got to know each other well as a first priority. Board members agreed that to work well together, it was more important to understand each other than to understand the business. 

So, the board spent two half days together with the objectives of learning more about their personal and professional background, their work styles, and establishing objectives for how they would work together. The experience started with an informal dinner with no set agenda where the group got to know each other as people. The following morning, the group tackled three subjects: getting to know each other personally; getting to know each other professionally; and board norms. 

To get to know each other personally, board members interviewed each other in pairs and then shared what they learned with the group. To get to know each other professionally, individuals shared good and bad team experiences from their past and commented on the skills and experience they hoped to bring to the board. 

Perhaps the most enlightening part of this board orientation meeting was an exercise through which each member considered the role he or she typically plays on a team. Based on the MTR-i team roles, which uses the same underlying theory as the widely recognized Meyers Briggs Type Indicator of personality preferences, the exercise focused on identifying the role or roles each board member would likely play in the boardroom. Individuals shared whether they were more likely to bring innovative ideas to the table, synthesize the ideas of others, define priorities or bring the group to closure, as examples. This exercise provided the group with a clear understanding of the communication styles of each member of the board, which helped them consider how they might work together to make decisions. 

Building on this exercise, the board completed its orientation session by discussing norms for how they would like to work together. Areas of discussion included communication norms, expectations around resources and education, interaction with key stakeholders of the business, board culture, expectations of each other, and meeting logistics and structure. They made decisions about what information they would like to receive between board meetings, how they will provide input to board agendas, what committees they believe will be important and how committee responsibilities will be defined, how board members will interact with the larger shareholder group and with senior management, and what information will be shared out of board meetings with shareholders, as examples. They also drafted a list of topics they would like to discuss in board meetings and a list of educational resources on the industry that they would find helpful. Expectations around how the group will operate together at and in between meetings were captured in a draft document that will be approved at the first board meeting, ensuring the group gets started with a set of agreed-to guidelines that are informed by deeper mutual knowledge and appreciation of differences.

This board is confident that the work members have done together in advance of their first business meeting will ensure that they are able to have an immediate impact on the business. In particular, they believe the investment of time in getting to know each other will reduce the likelihood of communication breakdown or other common misunderstandings that can derail a group.

This model of understanding team roles and defining group norms can be used for any decision-making body: a family council, working group of family members, sibling or cousin team, or board of directors. Even if your decision making group has been working together for a while, it can be very beneficial to take a step back from your to work on regular decision-making, and take some time to work on your group process. If you don't have time to create a special meeting to discuss team roles and norms, you can break the topics up across a couple meetings. If you have been working together for a while, you can focus on norms that have already been created, dividing them into what you would like to keep and what you would like to change. Capturing norms in writing creates a basis for improving team process and for incorporating new members into the group over time.

You may be surprised to find that taking a little time to focus on how you are making decisions, as opposed to spending all your energy on the decisions themselves, will actually make you more efficient, improve group harmony and understanding as well as the quality of the decisions you make!

 

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