One of the facts that clearly distinguishes family businesses is their peculiar way of making governance decisions. At the management level, decisions are taken by those who have the competencies and managerial skills, but in Boards of Directors and Shareholders Meetings as well as in Family Councils and Family Assemblies, the focus is placed on the unity of the members in the governance team. Lots of family business decisions are not based on technical skills and present multiple or alternative –complex-choices.
The fact is that, in our western societies, the thought -more or less politically correct- that “democracy” and thus voting should be the way to make decisions in the governance structures of our businesses is really extended. But reality shows us that the great majority of family businesses govern and make decisions more based on agreement and consensus. Is it wisdom or is it another family business weakness? Is agreement or consensus decision-making a lack of professionalism in governance?
• Decision making by “voting” is fine when confronting urgent issues or when interests at hand are in contradiction and we have to make a choice. Inherent to this type of decision-making is producing sharp decisions and division among those who are deciding. As the philosopher Polo said: “voting is giving to the will the priority over the intelligence on an issue that must be cleared intellectually”.
• Decision making by “consensus” is reaching an affordable position although not necessarily fully accepted. Division among deciders is lower here although remains implicit.
• Decision making by “agreement” is the way followed by healthy institutions in which everyone is seeking the same ends in unity. In those the common feature is accepting –intelligently and full of commitment- the position of the majority. Agreement is a better way of making decisions than consensus.
Voting can help when members of the board or council need to know the different points of view or positions on an issue at hand, so as to explore better alternatives of choice and thus, come to better agreements. When there is no clear decision and no agreement can be reached, it is wise to continue studying more options and alternatives (and try not to implement a divided decision).
Thus explained, the difference between governance by voting, agreement or consensus, we can reach the conclusion that in family businesses:
• Implementing decision-making policies based on voting decisions, pretending professionalism, is frequently an error.
• Implementing decision-making policies exclusively based on consensus is also an error. Consensus in making decisions frequently hides the imposition of minority criteria, thus recognized as “the tiranny of the minority”. Habitually, directors or members of the council are aware that the decision is wrong or simply is not a solution to the conflict.
Healthy families work collegial decision making with intelligence and accountability, and that implies:
• Decision-making by voting only when it is really urgent to reach a decision on the issue at hand, or just as a way to know the positions of the members of the board or council more clearly.
• Forming an active board of experienced outside directors or having facilitators in the family council, to help understand the right and better decisions for the business.
• Improving communication and information among the family members. Educate family members in governance, fostering unity and commitment with adopted decisions.
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