Very! Especially when it comes to elections that involve your family’s business. To be successful, family owners need to have good governance practices in place at least by the third generation. By that time, cousins own the business together, and decisions generally need to be made by a large number of people rather than a single owner or siblings.
Recently I was meeting with a family who were in the process of organizing their first Family Council. We talked about all of the exciting things the Council could do, such as creating the philosophy of family leadership in the business and drafting a family-employment policy.
A hand shot up at the back of the room, and a young woman asked: “But where does the Family Council get all of this power from? What if the Council does something the family does not agree with?” I explained that this power would come from all of the family members who were with us in the room that day. They would ultimately become the Family Assembly, which is usually composed of all of the members of the family. I told her it is generally the charge of the Family Council to draft the charter, but nothing could actually happen unless family members showed their support by voting.
Next, she asked who could vote? Would it be just the owners? Would spouses be included? How old would family members have to be in order to vote? I explained that the answers to these questions vary from family to family, but I assured her again the entire family would have the opportunity to vote on these issues. She looked greatly relieved.
Of all the voting family owners do, voting for family leaders is probably the most vital. Family Assemblies usually vote for Family Council members, and the Council members vote for who will lead them as their Chairman. That’s why when you have the opportunity to make this crucial leadership decision, please be sure to vote!