Family Businesses: How Directors can Manage Key Issues in a Family Firm
A Directors Guide edited by Tom Nash for the Institute of Directors (IoD).

ISBN: 0-7494-2947-X, Publisher: Director Publishing, 1998
Reviewed by: Julie Garland McLellan*


The difficulties inherent in balancing the goals and needs of a family with those of a business are myriad and diverse. This small book covers most of the key issues including culture, conflict resolution, shareholder agreements, finance, remuneration of family and staff, motivation, succession planning, finding roles for family members within the business and engaging family members who don't work in the business.

Each chapter is written by an expert on that particular topic and, although the book is excellently edited, this gives it a diverse chorus of voices and a 'magazine feel' rather than a single tone as in most books. The writing is clear and concise. This is a book for a short plane ride; you will need more reading material if flying for over two hours. I thoroughly enjoyed reading it.

Unfortunately the book is poorly subtitled. The advice is more relevant to the family members and senior managers and does little to explain when a formal Board structure should be introduced. This is a shame as many family businesses reach a size where a formal separation of powers between shareholders, Board and management would provide much needed simplicity and control. There is no exploration of the pros and cons of family members on the Board and of when non-family members should be introduced. The value of independence and the value of deep and enduring family ties are two conflicting requirements that most family Boards struggle to resolve.

That said this is a useful and practical book. It deserves a place on the bookshelf of any Director of a family-owned Board. I wish I had read it before my first foray into the sector. It is hard to reconcile the rightful desire of skilled managers for meaningful career progression with the rightful desire of scions to gain control over their inheritance. Knowing that this is a common phenomenon and that there are structures which will accommodate both can make life easier for all concerned.

There is much to be said for the role of the Board as intermediary between the owners and managers even when both ownership and management are predominantly in family hands. The book is disappointingly tacit on how and when a Board can take on this role.

It is ironic that I read this book just as the saga of the Fairfax Board, with its overtones of dissent between family and independent directors, was making headlines around Australia. Some of the problems that Board faced were clearly foreseeable and grew out of a rift between family nominees and independent Directors on the Board. Other problems appear to have grown, as do so many Board problems, from a failure to develop true consensus and to nurture Board unity. A discussion of how to get the best of all possible worlds from a family company Board structure would have lifted this book from good to great. Even with this lack of information, it remains a highly recommended book.

*Julie Garland McLellan is a governance and Board consultant. She is a professional non-executive director and an AICD NSW Councillor. She is the author of "All Above Board: Great Governance for the Government Sector" and is currently working on her second book "All Above Board: Great Governance of Strategy and Risk". Her newsletter "The Directors' Dilemma" is read in 23 countries and her training manual "Presenting to Boards" has recently been released as an e-book.

Julie Garland McLellan to judge 2011 Global eBook Awards