The founding family of a company must establish rules and regulations to manage itself internally and ensure its future. Failure to address these issues, not knowing how to organize and manage, will lead to the organization’s disappearance. Therefore, the Family Council in companies is crucial for continuity.

The establishment of family contracts outside the company has gained importance in recent years. Although the contract is a necessary mechanism, it must be complemented with a system and management philosophy, especially for companies in which the family wants to continue participating in the administration.

Our managing partner, Hector Torres, specializes in advising family businesses to ensure their continuity over time. Firstly, Torres emphasizes the need to differentiate between the Family Council, the Board, and the Board of Directors, with the Family Council being an additional body that delves into family issues and decisions affecting the company.

“A Family Council helps in transmitting values and culture within the company and the family. This body encourages the participation of the new generation in decision-making and carrying on the family’s tradition,” he asserts.

The purpose of the Family Council is to create a family business project that serves as inspiration for the family and fosters values of unity and responsibility. This requires deep dialogue and making decisions on various important issues that can affect both the family and the company.

This component can be of great help to family businesses transitioning from informality to formality, establishing rules and governance structures for their preservation in the market.

Another benefit of such councils is opening up communication channels and separating discussions of family and business matters from day-to-day operations, allowing family members to focus on the positive aspects of family relationships, achievements, and milestones.

In any relationship, problem areas tend to take precedence, overshadowing the good and functional aspects. Family councils enable families to correct this imbalance, enabling them to talk and discuss more comfortably and reaffirm their commitment to each other, family values, and the business.

Regarding the number of members and who should be included, our expert recommends that the council should consist of the founders, heads of the various family branches if there are multiple, and external individuals who can provide professional and objective input in all processes.