Let's take out the sheet that covers the Family Protocol ghost and see what's underneath.
The Family Protocol is the document that results from a deep debate among the members of the business family, in which the agreements reached on how to act and decide in the future are recorded in the face of particular conflictive situations that are not contemplated in the constitutions and laws of different countries.
It contemplates the issues that concern the business family and that it is convenient to express them, debate them and try to define the position of the group, before the problems arise.
The Family Protocol can conclude in a "Gentlemen's Pact" in which the issues that concern the whole are settled, the decision-making and definitions adopted at the time of treatment, with the express consent of those understood who obliges from a moral, family and social point of view.
In another instance, it can form a "Contractual" document that legally binds the signatories, which requires legal precision and compatibility with the general order.
“Institutional” Protocol as a third instance, and to the extent that the family members so decide, it can be incorporated into the statutes or social contract of the company through a commercial legal act, so that it is possible to oppose it against third parties who have not signed it, for which it will be necessary to resort to complementary legal instruments.
Although we can find FP models in publications, on the web or other sources, it is important that they are carried out specifically for the business family with whom we are working, because we must first consider what the family culture is, what type relationship between family members, what is the Mission they defined for the company, the meaning they intend to give to the legacy they will have for their descendants, what relationship they want to maintain between the company as an economic patrimony, the family as a social group that seeks harmony and expects results from the company, and the functional operational management of those who will manage the activity.
The greatest benefit that is obtained from the concretion of the PF is, precisely, the process of honesty of the participants, declaring what their doubts and concerns are, the definition of decisions and actions to be carried out at the moments that must be acted upon, taken at the distance and rationally, avoiding urges and excessive emotions. The main objective of this instrument is to advance on the harmony and harmony of the business family, clearing the future of possible unforeseen events.
It makes no sense to propose a model FP that has been achieved from the exclusive legal approach, this document must be particular for each business family and the consequence of sincere agreements in which each one expressed their wishes and listened to the opinion of the rest, validating the spirit of the family without abandoning the functional needs and requirements of the company.
Before addressing the treatment of the PF, it is convenient to have previously formalized the structure of the company and defined the management process, beyond the names of the people who occupy the positions and are responsible for the operational functions, as can be seen in the Notes Problems with solutions and A new seed for a field that is too trite http://www.progresa-pga.com.ar/notas/
At the beginning of the treatment, it is necessary to warn the members of the family business of the true scope of the PF to prevent them from expecting results that are not foreseen in the implementation.
We observe in several family businesses that the exercise of power is not in who has the largest shareholding or the greatest delegated authority, but in who has a stronger personality than the rest of the members of society who, in turn, accept the exercise of the power of this person and submit to his authority, even not agreeing with the decisions and actions.
If this situation occurs in many companies, we cannot expect that the imposition of a PF text will order the operation as expressed in its wording. Therefore it is essential to act rationally and emotionally to achieve harmony and concord during the debate and consensus of what is available.
Let us suppose that the PF provides that no family member joins the company without having worked for at least two years in a company that is not the family's business, and the person who exercises the power in fact presents his newly received and inexperienced son employment so that he begins to work in the family business, could we enforce the provisions of the PF without generating a conflict, even if it were incorporated in the social contract or statute? It would surely lead to confrontations of opinion, power and force.
These situations are resolved by resorting to dialogue and the fervent desire to respect all members of the group, which is what we strive to achieve by working on structures, processes and interpersonal relationships.
It is not possible to continue harmonious relationships if we need to solve problems in justice. Everyone should be able to demand the inalienable and give up the dispensable.
Its main characteristics derive from the very nature of PF, which can be synthesized in the following:
- Voluntariness - The Family Protocol is a process of voluntary self-regulation agreement, there is no obligation to draft it, it is the family itself who freely decides to elaborate it Capacity for foresight - The PF is an attempt to anticipate and objectify the situations that may arise in the future.Particularity - It is an individualized and customized document. There is no standard Protocol but it must be drawn up taking into account the specific circumstances of each company and each family.
Many general issues related to the regulation of Family Businesses and the relationship between people are contemplated in the Legislation and Constitution of the different countries, so there is no point in stopping to incorporate them into the Family Protocol, in which all should be considered. the particular issues of the company and family with which one collaborates to write this document.
We are going to propose a series of discussion topics with the family members of the companies in question to serve as an illustration where it is convenient to travel.
This list is incomplete and only serves as a trigger to start the talks in which the opinions of the participants are defined, issues that are not of concern to the participants are discarded, or others that are not stated are added.
Critical aspects for the future of the family
A) SUCCESSION
1.- How to guarantee the financial security of those who retire?
2.- What types of activities will they be involved in once they leave the company?
3.- How do we elect the next Board of Directors of the company?
4.- When should the generational transition begin?
5.- What distribution of authority is the most appropriate for the effective management of the company after the succession?
B) INCORPORATION INTO THE FAMILY BUSINESS
1.- How do we decide which family members enter the company?
2.- What preparation is required to enter?
3.- How is the position and responsibility determined at the time of incorporation?
4.- What do you do when an employed family member does not work properly?
5.- Do we allow wives and in-laws to work in the company?
C) REMUNERATION AND OWNERSHIP
1.- How do we evaluate and remunerate the family members who work in the company?
2.- Who can have shares in the company?
3.- What compensations are granted to family shareholders?
4.- Who participates in the financial decisions of the family business?
5.- What happens in case of divorce?
D) FAMILY HARMONY
1.- How do we deal with conflicts between different generations?
2.- How do we handle conflicts between siblings?
3.- How do we teach in-laws the characteristics and tradition of the family business?
4.- Who will lead and teach the customs and family activities to the new generations?
5.- How are future family decisions made?
E) RESPONSIBILITIES OF THE FAMILY BUSINESS
1.- How do we help family members with their financial or career needs?
2.- What happens when a member of the family breaks the agreements that have been reached?
3.- What type of financial information is provided and between which family members?
4.- How are the business ideas of family members supported?
5.- How do we deal with public image and social responsibility, successful families?
6.- How to meet the needs of a family member who requires medical or psychological assistance?
F) PREPARATION PROCESS
1.- How to do it?
2.- When to start dealing with the subject?
3.- Who participates and leads it?
G) CONTINGENCY PLAN
1.- What should be done now to deal with possible unforeseen situations?
2.- What should be done now to have a contingency plan?
3.- Topics that should be analyzed?
4.- What to do when the President of the company dies?
5.- What to do when the potential successor dies?
In turn, it is convenient to separate the material into different chapters that clarify the content.
DIFFERENT CHAPTERS OF THE PROTOCOL
CHAPTER I. SCOPE, NATURE AND PRINCIPLES CHAPTER II. GOVERNMENT AND MANAGEMENT CHAPTER III.. WORK AND TRAINING CHAPTER IV. ECONOMIC RIGHTS CHAPTER V. BUSINESS CONDUCT AND SOCIAL COMMITMENT CHAPTER VI. ORDER CLAUSES
SOME EXAMPLES:
Article 1. Area of application
A. Subjective scope
1.1 All members of the Family Group who sign this document, as well as the rest of the members who, because they are minors, have not signed it, are obliged to comply with the rules established in this Protocol.
B. Objective scope
1.10 The assets and rights that, coming from the assets of the Company, the Board of Members do not decide to disallow, will also be subject to the Protocol.
A. Culture and Traditions
3.2 The family culture is formed through dialogue and internal debate, analyzing own and other's experiences, constituting the table of common values and allowing all members of the Family to give their opinion. In family and corporate forums, the opinion of older members will always be taken into account with the importance, consideration and respect they deserve.
B. Unity and consensus
3.7 Decisions will be made seeking the highest degree of consensus possible. Even so, it is understood that the natural uniqueness of people makes it very difficult to systematically coincide in decision-making, so it will be necessary to coexist and promote the development of the Company, admitting that there are inconsistent or even conflicting points of view.
3.8 Notwithstanding the foregoing, the internal debate and differences that arise between members of the Family must not transcend third parties. The signatories of the Protocol will take care to maintain the unity of criteria when they are manifested in public or in private and the decisions that are adopted by the established majorities will be supported even by those who have not supported them.
C. Professionalism and solidarity
3.10 The Company will be governed by strictly professional criteria. The Family will abstract from their personal interests when making business decisions and will ensure that the administration and management of the Company is organized according to the social interest and not the family interest, pursuing the creation of long-term wealth for the shareholders.
D. Leadership and transparency
3.13 The administration and direction of the Company will be entrusted to the most suitable people because of their knowledge, qualities and leadership capacity. As far as possible, the executive management of the Company will be entrusted to a single person.
Article 4. The Family Council
4.2 Members. The Family Council will be made up of the following members: the heads of the Family Branch
The Founders will be part of the Board until they voluntarily decide to disassociate themselves or if there is any legal or other reason that prevents them from exercising their function normally.
4.4 Specific functions. The functions of the Family Council are those necessary to carry out its mission. For guidance purposes, the following can be listed:
- d) Administer and manage the guardianship obligations in the training and professional orientation of young family members established in the Protocol
Article 8. Appointments Committee
8.1 Mission. The main mission of the Appointments Committee is to examine and evaluate the trajectory, capacity and managerial qualities of the people who present them and to issue an opinion on their attitude and suitability to perform certain managerial functions. It will also issue an opinion on issues of training, incorporation of family members to work and other similar issues that may be requested.
Article 9. Conditions of access and work .
9.1 Access. As a general principle, it is established that the members of the Family may occupy jobs in the Company, provided they are consistent with their knowledge and experience.
9.2 Prudence. Notwithstanding the foregoing, it must be taken into account that an excess of Family members working in the Company is at the base of many business declines of family companies. The excess of family employees makes it difficult to recruit good professionals, since the company loses its attractiveness and does not always contribute to creating a competitive and efficient work environment.
- Candidates must be in possession of the academic qualifications and experience required by the job they are applying for.Before applying for a job in the Company, it will be necessary to have completed a period of two years working in another company not related to the Company of the family Fluent knowledge of at least one foreign language
f) To avoid tensions between the Family Branches and except when there are understandable circumstances that clearly prevent or advise against it, the policy of incorporating family members into the company will tend to balance the contribution of each of the Branches ensuring that they keep a certain proportionality.
As can be seen, these are some of the topics that should be discussed in the meetings to prepare the document. It can also be noted that many topics touch people's intimate fibers, so special care must be taken not to upset the participants and provide as much support as possible.
Surely they will be able to find more material on the subject that will help them to form an idea that is completely finished of the implication of the facilitation work in the achievement of family harmony, clearing up doubts about the intentions of the components
EDUARDO BRONZINO PROGRESA Consultant
www.progresa–pga.com.ar [email protected]
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