Family Business Decisions

Achieving unanimous agreement on decisions in family business is no small task. When members of a family enterprise fail to make wise decisions, the business suffers. When decisions polarize group members, family relationships suffer. Consensus decision-making helps to alleviate these problems. If a family is committed to working together for the long term, it is best to embrace the consensus model.

However, consensus decision making may not go well with the various roles of a family member such as owner,
a board member, an employee and as a family member. Board meetings usually operate on a one person one vote method regardless of the shareholding. At the owner's stock holder meetings, decisions are generally taken by casting vote according to owner’s share holding percentage of family business. A simple majority is required for taking decision on most board matters but good family business boards utilize consensus style of decision making thereby avoiding the voting process.

There are several family business matters on which decisions have to be taken. When faced with tough issues some families look to their senior generation or a senior family member for an appropriate decision. But this type of decision making cannot last beyond a generation or two. In many second generation families it is the group that makes the decisions as one person making or controlling decisions may not be acceptable to all.
Families who make group decisions may adopt a one-person, one-vote rule. Voting can bring decisions to quicker resolution, and as long as everybody understands what the voting rules are, the group generally will be able to support the outcome. A full discussion of all viewpoints followed by a vote with a simple majority rule is a
common practice.

Many successful business families have been using the consensus decision making for years. Consensus offers the opportunity for greater implementation success due to the broad support derived from the way the decision is made. However it must be noted that consensus decision making is time consuming and it can work only when the group has excellent process and negotiating skills, the assistance of a good facilitator or both.

Most families realize that unanimity is difficult to achieve so in order to achieve consensus on issues is to opt for majority vote with provision for individual veto feature. This method allows each person to cast a vote in one of four ways. The person can support, oppose, abstain or can object to the decision. The object vote must be used only in rare circumstances and families should discuss the matter thoroughly before going in for the voting process.

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