EJFB2444-8788Uma Editorial, University of Malaga (Spain) Is “Something Else” Needed Before Establishing a Family Council? The Role of Communication in Business Familiesole of communication within business families Rodríguez-García María maroga27@uv.es González-Cruz Tomás tomas.gonzalez@uv.es Instituto Universitario de Investigación en Economía Social, Cooperativismo y Emprendimiento (IUDESCOOP), Universitat de València Spain Instituto Universitario de Investigación en Economía Social, Cooperativismo y Emprendimiento (IUDESCOOP), Universitat de València Spain © 2024 The Author(s)2024This work is published under the Creative Commons License 4.0 (CC BY 4.0 ).260620241498116120320241806202426062024

Is “Something E lse” N eed ed B efore Establishing a F amily C ouncil ? The R ole of C ommunication in B usiness F amilies

Abstract

Establishing a family council can be beneficial for business families. However, determining the optimal circumstances to do so can be challenging. While some experts argue that a family council always provides long-term benefits, recent research on family councils suggests that there are certain prerequisites for successful family council implementation. This paper explores the nature of these prerequisites by examining communication dynamics within business families. Olson’s Circumplex Model is transferred from family therapy to the context of the family council by applying Habermas’s criteria for an ideal speech situation. Within this framework, a communication continuum on which to position business families is developed. This continuum is then applied to three Spanish business families. The findings suggest that a family council is functional only when minimum communication standards are met within the business family. Otherwise, the family council may have a minimal or even a negative impact. Families with an active family council should prioritise its use as a space for dialogue to enhance the business family’s functionality before tackling any other tasks or functions.

Keywords: Family council, Business family, Communication, Dialogue

JEL: L20, L29

Introduction

In the mainstream family business literature, it is assumed that the family council provides benefits for the business family such as family harmony, adherence to a common purpose (Carlock & Ward, 2001), conflict management (Berent-Braun & Uhlaner, 2012) and commitment (Gnan et al., 2015; Scholes et al., 2021). A family council is also supposed to facilitate complex processes such as succession (Jaffe & Lane, 2004) and enable next-generation involvement, while protecting intangible assets such as trust and values that are crucial for the family–business relationship (Scholes et al., 2021). As a governance structure, the family council reportedly has significant potential to produce positive outcomes when family complexity is high (Gersick et al., 1997; Matias & Franco, 2021; Suárez & Santana-Martín, 2004). Accordingly, business families establish a family council when the family reaches a “critical size” (Nordqvist et al., 2014, p. 195).

In addition to size, the literature cites other factors that drive the establishment of a family council, such as professionalisation. Professionalising the business family involves regulating family relationships and defining organisational structures (Stewart & Hitt, 2012). In relation to the origins of professionalisation (Wilensky, 1964), a business family becomes professionalised when it includes a fair set of rules and standards. The family council enshrines this set of rules to formalise family relationships and establish clear roles (Polat & Benligiray, 2022). According to Poza (2013), in a family business, the family council performs the same function for the family as the board of directors does for the company. This dual professionalisation separates corporate governance functions from family council roles (Gnan et al., 2015).

Given these multiple professionalisation benefits of family councils, practitioners seem to accept the assumption that the time is always right to implement a family council (Beltrán, 2021). However, in the only handbook on family councils published to date, Eckrich and McClure (2012) explain that not all business families need a family council. According to the handbook’s authors, some business families might need “something else” first (Eckrich & McClure, 2012, p. 13). This statement refutes previous thinking by implying that the family council does not necessarily bring positive outcomes. But what do these authors refer to by “something else”? Are there situations where it is inappropriate to establish a family council?

This research question is relevant for at least two reasons. First, family business scholars need theoretical frameworks to understand family group dynamics and their effects on family council implementation. Second, the absence of theoretical advancements means that practitioners lack a clear framework when consulting with business families about developing, starting or renewing family councils.

Because the literature pays scant attention to the vaguely defined concept of this “something else” that is needed to implement a family council, further exploration is required to discern when the family council capitalises on inherent family strengths or when it arouses underlying threats. This paper explores the factors contributing to the complex phenomenon of “something else”, recognising that, to comprehend a family business, it is crucial to examine the dynamics of the business family (Taylor & Norris, 2000) and the ways in which family members interact with each other (Paskewitz & Beck, 2017). These interactions can be captured to some extent through family communication patterns. Therefore, the research question addressed by this paper is as follows: What are the communication prerequisites to establish a functional family council?

This study is built on a solid framework consisting of ideas from family therapy and the sociology literature to explore the level of communication within the business family and understand what circumstances prevent the family council from being functional. This paper starts with Olson’s Circumplex model (Olson, 2011) as a template to provide a structured yet flexible framework for data interpretation (Langley, 1999). However, the proponents of this model did not develop a communication dimension. Therefore, such a dimension is developed using the five criteria defined by Habermas (1982) for an ideal speech situation. The developed communication dimension emulates Olson’s continuums for cohesion and flexibility. Accordingly, the communication dimension is proposed as a continuum with two extremes (silence and noise), with any given business family positioned at some point along this continuum.

Based on analysis of three real-life cases of business families, the findings confirm the expected results based on the theory developed in this paper. Namely, the family council generates desirable outcomes only when the business family is balanced on the communication continuum (i.e. when certain conditions are met for the family council to ensure communication interaction among family members). The paper thus shows that effective communication is a requirement for the optimal functioning of the family council. Meeting communication prerequisites is essential for business families. Failure to do so can negate positive effects and lead to counterproductive outcomes. The paper also reveals that when communication prerequisites are not met, the family council must be used as a forum to seek effective dialogue.

The rest of the paper is structured as follows. Section 2 describes the development of the communication dimension. Section 3 specifies the method, including the empirical setting, case description, measures and case analysis. Section 4 presents the findings. Section 5 elaborates on the propositions and main outcomes of the research. Section 6 addresses limitations and opens new avenues of research.

 Theoretical Framework

Communication plays a crucial role in business families, especially in terms of family dynamics. According to Afifi and Nussbaum (2006), effective communication is the foundation of family dynamics because it helps maintain strong bonds between family members. Likewise, business family communication is crucial to the continuity of family businesses (Paskewitz & Beck, 2017). In particular, intergenerational communication throughout the succession process is important for ensuring a smooth transition (Leiß & Zehrer, 2018). Otherwise, communication traps can disrupt family harmony during transition (Michael-Tsabari & Weiss, 2015).

Regarding the family council, Poza (2013) has argued that having open and safe communication processes among family members in family council meetings is a prerequisite for the family council to act as a mediating and conciliating mechanism. Building on Olson’s Circumplex model (Olson, 2011) and Habermas’s theory of communicative action (Habermas, 1982), this paper explores situations where business families do or do not meet those communication prerequisites and investigates how doing so affects the outcomes of family councils.

Olson’s Circumplex model in family business research

Olson and collaborators proposed the Circumplex Model of Family and Couple Systems to assess family functionality based on the dimensions of cohesion and flexibility (Olson, 2011; Olson et al., 2019). Each dimension is conceived as a continuum. Any extreme of either dimension represents an unbalanced position of the family system, while the centre represents a balanced position (Figure 1). The model consists of the curvilinear dimensions of family cohesion and flexibility (Olson et al., 2019), as well as a third facilitating dimension: communication. The facilitating role of this third dimension means that communication is conceived as helping business families move from one position to another in the model.

Figure 1. Olson’s Circumplex m odel

Source: Olson (2011).

The Circumplex model has three main assumptions (Olson, 2011; Olson et al., 2019). First, balanced family systems are more functional than unbalanced systems. Second, balanced families are more likely to manage stress and change. Third, unbalanced families must seek balanced positions through communication-based therapy (Olson, 2011).

This paper builds on this model because of its use in previous family business research. For example, Daspit et al. (2018) acknowledged the application of the Circumplex model to family firms in 13 articles. In some papers, it is used to characterise the first generation (Michael-Tsabari & Lavee, 2012) and to build a family’s emotional archetypes (Labaki et al., 2013). However, although these studies advance the understanding of family dynamics, the Circumplex model has never been used to assess the functionality of family governance mechanisms such as the family council. The current study addresses this gap by focusing on the communication prerequisites for a functional family council. For this purpose, the communication dimension of Olson’s Circumplex model is considered.

The cohesion and flexibility dimensions of Olson’s Circumplex model offer insights into the business family’s operational patterns. In this model, communication is considered part of the therapy process, so the authors did not develop a communication continuum. To diagnose the business family’s underlying communication patterns, this paper extends the model by developing the communication dimension. The following sections describe the criteria for an ideal speech situation and develop the communication continuum.

 Communication dimension: Criteria for an ideal speech situation

To develop a continuum to diagnose a family’s communication situation, Olson’s Circumplex model (Olson, 2011) is complemented with the postulates of Habermas’s theory of communicative action (Habermas, 1982). In this theory, Habermas provides a series of conditions for an ideal speech situation. Speech (also referred to more broadly in this paper as dialogue) is a process of active listening and the search for agreement. For Habermas, dialogue consists of putting forward arguments and ensuring understanding on the other side, thus reaching intersubjective agreements. These agreements are only valid when all those affected by the agreed norm are represented in dialogue and consensus. In addition, there is a public forum to review and modify agreed norms.

For a speech situation to drive mutual understanding, it must meet five criteria. Despite often differing from honest family communication, these five criteria offer a guiding reference for ideal communication. Table 1 details the five criteria.

Table 1 . Conditions for an ideal s peech situation

Conditions for an ideal speech situation
Validity Cooperative search for truthAll affected by the norm must commit to truth-seeking through mutual trust, prioritising truth over individual desires. For example, lying prevents the establishment of valid relationships with others because it entails information asymmetries between speakers.
Intelligibility Disposition to understandingThe purpose of communicative action is understanding in a double sense, to reach an intersubjectively recognised agreement. All speakers must grasp each other’s arguments. Language is the tool for presenting ideas and facilitating understanding. For example, if technical terms are used in a family council meeting, the younger generation may get lost in the discourse.
Symmetry Equality of speakersAll participants in speech must be equally represented and recognised as equals, ensuring balanced representation and consensus. All arguments have the same validity, and the argumentation’s strength comes from the weight of reasons. For example, when the arguments of some members in a family council meeting are ignored, the equity of speakers is threatened.
Seriousness Communication responsibilityAll involved should aim for collective consensus, eliminating any attempts to boycott dialogue. All members are aware of their communicative responsibility and are open to sincerity. For example, when specific topics are avoided at a family council meeting (unresolved conflicts, non-validity of other’s experiences, etc.), the seriousness of communication is threatened.
Freedom of expression Recognition of freedom of expressionfor all subjectsAll speakers recognise each other as free subjects. In the action of communication, there is no coercive or manipulative behaviour on the part of any of the speakers. The only criterion determining the agreement reached through communication is the weight of reasons. If the arguments of any member are not validated, freedom of expression is threatened.

Source: Authors based on Habermas (1982).

 Development of the communication continuum

This paper presents a continuum for the communication dimension by analogy to the cohesion and flexibility dimensions of Olson’s Circumplex model (Olson, 2011). This continuum enables assessment of business families’ level of communication. As shown in Table 2, the ideal speech situation is represented by a balanced position (i.e. equilibrium), whereas the two extremes represent unbalanced positions.

Conditions
Validity There is a lack of trust to express individual interests and pursue collective interests.Is there a lack of trust in family members to express your interests and concerns?When there is a conflict, is there rarely collaboration to find a joint solution? Cooperative search for truthHow important is it in your family to tell the truth?Is there a willingness to seek the truth cooperatively in your family?In your family, are the arguments of other members generally recognised? The cooperative search for truth reaches such levels that individual needs are not considered.When there are differences of opinion, are individual interests overridden and the collective benefits put first?In a debate situation in your family, is there no room for everyone to express their point of view?
Intelligibility There is a lack of expressiveness, arguments and common thread to facilitate dialogue. There is a lack of willingness to reach an understanding to find intersubjective agreements. Logical arguments are lacking.When there is a diversity of opinions, do you usually find it challenging to understand the arguments of the other side?When discussing an important issue, are there few ideas and no clear arguments? Disposition to understandingWhen there is a diversity of opinions, is there usually a willingness to understand the opposing side?In a discussion, does each side use rational and feasible arguments to explain its position and try to convince the other?When discussing an important issue, are ideas presented clearly so that all family members can understand what has been said? The number of communicative stimuli is so high that it is difficult to put together a clear, concise and direct argument that all parties can understand.When talking about an important topic, are many ideas presented in a disorderly way, preventing the understanding of the message?In conversations in your family, is there usually too much noise so as to prevent you from understanding the messages?
Symmetry There is unbalanced representation. Some people have greater responsibility, and their arguments are more valuable than those of others. Some people affected by the rules are not represented in the dialogue.When there is a disparity of opinions, are there family members whose arguments carry more weight?Are there any family members who have more authority than others?Do the arguments of any family members outweigh others? Equality of speakersIn a family conversation, do all arguments carry the same weight, regardless of who they come from?When making a decision, do all voices carry the same weight? There are people who are not affected by the rule. The absence of certain limits (age of majority, family status, etc.) hinders dialogue and consensus among stakeholders.When you must make a decision, are there any members who participate in the decision, even if it does not affect them?In critical situations, are there people not affected by the situation who take part in the discussion?
Seriousness Dialogue, arguments and communicative action are undervalued.There is a lack of communicative responsibility and a lack of interest in consensus building.When you must decide, do some family members shirk their responsibility?When there is an important issue, do some family members adopt a passive attitude towards the matter?In your family, are dialogue and the search for consensus usually undervalued? Responsibility in communicationAre you normally open and honest when expressing your concerns and interests?Are you usually aware of how your words can influence other family members (communicative responsibility)? All communicative action is measured, analysed and counter-argued at such high levels that it hinders dialogue and makes it difficult to reach a consensus. There is a lack of accountability and communicative engagement.When a situation requires action, are there too many arguments and analyses to the point of hindering communication?In family group dialogues, is there too much noise so as to prevent reaching clear conclusions?
Freedom of expression There is no common space where speakers can communicate their concerns, interests and desires. They do not recognise each other as equals.When there are different points of view, are there any family members who feel shy about expressing their opinions? Recognition of freedom of expression for all subjectsWhen there are different points of view, do all family members feel free to express themselves openly? There is a common space where any idea is communicated without regard to the reasons. Coercive behaviour is often used to influence the other parties.When there are different points of view, is there a family member who influences the opinions of the rest?

Source: Authors based on Habermas’s Theory of Communicative Action (Harbermas, 1982).

 Method

The current study uses a qualitative approach to gain insight into the intimate details of communication patterns in business families following a case study structure. According to De Massis and Kotlar (2014), most qualitative studies of family business use the case study format because it can shed light on the intricacies of the company–family system. In addition, the case study method effectively explores hitherto unknown, complex and difficult-to-observe phenomena, as is the case of the family communication logic. Given the lack of consolidated theory on family councils and communication patterns, the exploratory case study method offers a way to understand family dynamics (De Massis & Kotlar, 2014; Yin, 1993). Building on a model from family therapy, this paper explores communication patterns in business families. In line with this approach, the alternate templates strategy (Langley, 1999) acknowledges that using a priori theoretical lenses can coexist with inductive analysis, providing a structured yet flexible framework for data interpretation.

Given the exploratory nature of the analysis, the interviews had a semi-structured format. While an interview protocol was used, questions were flexible and open ended to allow findings to emerge organically from the data. The interview protocol was refined as the data collection process advanced.

Empirical setting

The study examines three business families. To ensure the validity and reliability of the research, a case-selection, data-gathering and analysis protocol was designed. Specific business family characteristics were sought to seek contrasting communication patterns in the selected cases. The protocol defines both homogeneity and heterogeneity in the characteristics of the cases.

The research focused on business families that had family councils that had been active for at least five years, that were active in a Spanish cultural context and that provided access to at least three family informants. The study also considered different communication patterns, family council dynamics and family life cycles to ensure maximum heterogeneity. The degree of professionalisation, defined by clarity of the organisational structure, varied across the three cases. Two families (Bennu and Philia, described later) had a high level of professionalisation. The third (Nenia, described later) had a low level of professionalisation, often mixing the business and family spheres. Table 3 gives more information on the protocol.

Table 3 . Research and interview protocol

Case selection Maximum homogeneity Spanish cultural context
Perceived family complexity business family 2.0 (Kleve et al., 2023)
Maximum heterogeneity Different business family profiles (Olson’s Circumplex Model)
Different family council functions, structure and content
Different family life cycle and generations
Access to business families Family Business Advisors Association (Club de Asesores de Empresa Familiar, CAEF)
Unit of analysis Business family
Construct validity T riangulation Access to a minimum of three family informants in each business family
Methodological tools FACES IV scales (Olson, 2011)
Communication continuum with two extremes (noise and silence)
Reliability Moving from individual to group level Coorientation criteria from social cognitive theory: agreement, accuracy and congruence (Koerner & Fitzpatrick, 2006)
Codification Textual quotations, themes and aggregate dimensions
Research protocol Non-verbal communication and interview protocol; delimitation and definition of constructs
Interview panel Research team (two authors and one collaborator with a PhD in Business Management)
Recording and transcription Authors with the support of Transkriptor software
Analysis of discourse and codification Authors
Research protocol validation Meeting of authors after each interview to discuss main findings and refine the interview protocol for future iterations

Source: Authors.

Data collection took place from February to April 2023 and consisted of 18 interviews providing 1,255 minutes of interview data. The research team took care to maintain the confidentiality of the business families, using fictitious names for all informants to ensure anonymity. The interview protocol was the same for each informant. Table 4 provides the characteristics of all informants.

Table 4. Interviews with family members
N o . Interviewe e Generation Interview duration Interview format Official role in family council N o . interviews
BENNU FAMILY 1 Osiris 6G 2 h 52 min(1st interview) In person Active support to chair 2
1 h 45 min(2nd interview) Online
2 Isis 6G 1 h 05 min In person Chair 1
3 Maat 7G 55 min In person Attendant 1
4 Horus 7G 1 h 15 min In person Attendant 1
PHILIA FAMILY 5 Poseidon 2G 26 min In person Attendant 1
6 Hermes 2G 41 min In person Attendant 1
7 Heracles 3G 1 h 16 min In person Chair 1
8 Athena 3G 1 h(1st interview) In person Active support to chair 2
42 min(2nd interview) Online
9 Hera 3G 49 min In person Secretary 1
10 Hefesto 4G 43 min In person Attendant 1
11 Apollo 4G 55 min In person Attendant 1
12 Artemis 4G 47 min Online Non- attendant (younger than 25 years) 1
13 Cronos External consultant 1 h 18 min Online Facilitator if applicable 1
NENI A FAMILY 14 Jupiter 3G 1 h 02 min Online Active support to chair 1
15 Juno 3G 2 h 5 min In person Chair 1
16 Minerva 3G 1 h 19 min In person Attendant 1

Source: Authors.

 Case description 3.2.1Bennu

Bennu family business was founded in 2004 by siblings Osiris and Isis (6G) to manage the family’s wealth. Currently, the 6G is active in the management and ownership of the business, and the 7G is active on the family council (currently without ownership or management). Eight family members attend the family council meetings. Bennu is the third family business of the family group. Its business strategy is diversified across liquid assets, real estate and corporate assets. Figure 2 shows the family tree of the current business family, considering its two previous separations.

Figure 2. The Bennu family tree

Source: Authors.

The first family business was started in 1867 by the founder (1G), the founder’s child (2G) and the founder’s grandchild (3G). In the 4G, a single family member (Atum) led the company. The strategy of this first company was focused on being a single business. When the 4G passed away, the company was led by the two brothers of the 5G. In 1989, the company was dissolved and sold. At that time, the two family branches opted for different corporate strategies.

As the strategies differed, separate companies were created. In 1991, Amon (5G) set up a new company with four children. Based on the corporate priorities, the strategy of this new company was based on company diversification.

After a few years operating in various industries, the company was sold in 2004. This time, the second family business was dissolved. Osiris and Isis (6G) sold their shares to start a new project together, with a different strategy from the previous one. At that point, the two siblings formed a new company based on an asset diversification strategy. Figure 3 shows the family business history.

 3.2.2.Nenia

Nenia, with the 3G at the helm, has over 80 years of experience in the food industry. 1G and 2G were also involved in corporate governance. The company markets its products in 48 countries and has 13 production sites in Spain, Italy, Poland, Turkey and the United Kingdom. By 2022, the group had a turnover of over 700 million euros. The group’s international workforce comprises 2,300 professionals.

The family business was founded in 1930 when the founder (1G) started buying and selling products in the food sector. In 1961, the siblings Neptune and Mars joined the business during the generational transition from 1G to 2G. The assignment of tasks was aligned with the temperament and character of each sibling. Mars oversaw purchasing and executive duties, drawing on an analytical profile. In contrast, Neptune managed commercial activities and production, exploiting a sociable nature.

The 3G gradually joined the business until, eventually, all members became involved in management. Two members (Juno and Apollo) have left the management. However, the rest remain in management positions. They are currently defining the company management model and drawing clear lines between the family, ownership and management spheres. Figure 4 shows the Nenia family tree and their involvement in the business. Currently, eight family members attend the family council meetings.

Figure 4 . The Nenia family tree

Source: Authors.

Source: Authors.

 3.2.3.Philia

Philia is in the 4G of active ownership. Three generations have been involved in the business governance system. They have been in the family business for 100 years and have provided textile processing solutions for 60 years. At present, all its activities focus on textile treatment solutions. The company is expanding internationally and provides services in more than 130 countries. Around 85% of turnover is generated outside Spain. Philia has production centres in Spain, France and China and employs 800 people. Estimated turnover in 2022 was 180 million euros, and 4.5% of turnover is allocated to research and development (R&D).

The family business was founded in 1920 by the grandfather (1G) of the current managers (3G). Years later, the children (2G) started what is the main activity today. The shift from 1G to 2G followed a functional approach, where each child took responsibility for a different business area. Hermes (2G) took over production, Poseidon (2G) took over commercial duties, and Eleos (2G) was responsible for human resources.

During the transition to 3G, the siblings Poseidon and Hermes decided to divide positions between the two branches, ensuring the balance of power. Finally, in 2008, Heracles and Athena were appointed managing directors. The rest of the 3G members developed their professional careers in other fields. The 4G members are all in the process of defining their professional paths. The 4G has a broad artistic identity and a keen interest in music, painting and sculpture. Figure 5 illustrates the Philia family tree. All 2G, 3G and 4G members are business owners. The 2G gave 10 shares to each member of the 4G at birth. Therefore, each member of the 4G has 0.1% ownership. The Poseidon family branch owns 36.6%, and the Hermes branch owns 36.1% of the business. There is therefore a balance of ownership between the branches. In total, 16 family members attend the family council meetings.

Source: Authors.

 Case analysis

Communication patterns differ across the three business families, as reflected by Table 5. The table highlights key quotations corresponding to the five conditions of an ideal speech situation.

Table 5 . Key quotations reflecting c ommunication conditions in Bennu, Nenia and Philia

Bennu Nenia Philia
Validity Balanced position (tending towards noise)“Having different points of view in decision making is inevitable, and even a good thing, because it enriches the outcome of the decision. This only happens if the goal is consensus” (Osiris, 2nd interview, h 1 min 37) Unbalanced position (silence)“There was quite a lot of friction between the two branches when my uncle passed away and we matured a little bit. Perhaps each branch was dragged by two or three people more than by all the cousins of each branch . . . because although we have many things in common, we’re different in each branch” (Juno, min 37) Balanced position (ideal speech situation)“When there is an argument, I explain it more delicately to find a balance. I keep educational minutes of the family council meetings. If it is very difficult for someone to speak and say something, then I make a record in the minutes that this person has said this. I do this to help and take care of all the people who are part of the family council” (Hera, min 24)
Intelligibility Balanced position (ideal speech situation)“For us, it is important to talk the same language. So, my sister and my cousin took more business-oriented courses to catch up with everyone else” (Maat, min 27)“We invited the 7G to listen in on the stakeholder meetings so that they could learn about the strategic plan of the business” (Osiris, 2nd interview, min 5) Unbalanced position (noise)“When developing the protocol, we had a hard time because everything was debated, even leading to some ridiculous situations” (Juno, min 26) Balanced position (ideal speech situation)“Our family council is a place where there is very open communication, with no boundaries. It is like a spiral of communication in every sense because if you ask something, it is explained perfectly, with attentiveness and respect. Our family council is a lot of wheels [representing the spiral of communication] going up and up” (Hefesto, min 12)
Symmetry Balanced position (tending towards noise)“In a family council, I said that I did not agree with that [a clause of the family constitution] because I thought it was not equitable for all family members” (Horus, h 1 min 2) They seek symmetry among family council participants,even though the 6G members lead the meetings Unbalanced position (silence)“I only talk to a family member if they see me as an equal. That is, I respect you as a person because each one of us has some bad things, but also some good things. Neither my opinion nor yours is best” (Minerva, h 1 min 11) Balanced position (tending towards silence)“The 3G asked us [4G] to what extent we see ourselves connected to the family and the business and in what way. Then they could see what our interests are” (Artemis, min 4)“Sometimes the 4G have little to say because our grandparents are still very active and make most of the decisions” (Hefesto, min 47)
Seriousness Balanced position (ideal speech situation)“In our case, the six of us (7G) have a perfect mix. I believe we can achieve great things if we organise ourselves and learn to reach a consensus” (Horus, min 43)“When you get together and talk constructively, you come to meaningful conclusions” (Isis, min 42) Unbalanced position (silence)“The potential of sincerity is huge, but we don’t currently have the capacity to be sincere on the family council, which would be the point where there would be real changes . . . I mean, when we’re honest, we get to a point where the relationship breaks down” (Minerva, min 36) Balanced position (tending towards silence)“We respect each other a lot, their time to talk, their silences . . . Sometimes when I want to say something, I feel like I’m on the road waiting to overtake and cars are overtaking while I need a bigger gap to get in. Then I feel like I’m stepping on someone’s toes, and I feel uncomfortable with that” (Apollo, min 12)
Freedom of expression Balanced position(ideal speech situation)“The fact that we (7G) are involved, ask questions and make comments helps give them (6G) an idea of our weaknesses, where they have to push the hardest, what is clearest to us . . . ” (Horus, h 1 min 4) Unbalanced position (silence)In practice, there are no spaces for family members to express themselves“We don’t have any informal forums. Within the organisation, we don’t have enough of a relationship to build the relationship back up. So, it can only be through the family council because it is formal” (Minerva, min 29) Balanced position (ideal speech situation)“I suppose because we have a good relationship, but sometimes if someone disagrees, they are given time to express their opinion” (Hefesto, min 36)

Source: Authors.

3.3.1.Communication in Bennu

The Bennu family is very aware of transmitting family values and traditions to successive generations through informal and formal means. So far, the members of the 6G, as leaders of the family group, have been in charge of the running and content of the family council meetings. However, the situation has changed. The members of the 7G have already internalised the family values and have more emotional maturity and judgement to raise issues, concerns and expectations about their connection to the business. The 7G members are beginning to express their concerns, interests and expectations in family council meetings. Therefore, the 6G is also learning to make space to discuss these issues. At Bennu, they underscore the importance of “speaking the same language” to ensure that they are aligned with each other. This alignment makes communication between all parties more direct and transparent. Considering these arguments and the key quotations in Table 5, the Bennu family is in a balanced situation. Specifically, it is in the upper balanced position, towards noise (Figure 6).

Figure 6 . Position of t he Bennu family in the communication dimension

Source: Authors based on Olson’s Circumplex model (Olson, 2011) and Habermas (1982).

 3.3.2.Communication in Nenia

Consistent evidence indicates that the Nenia family is in an unbalanced position. First, speaker representation is unequal. For instance, 2G women typically do not attend family council meetings. However, the outcomes of these meetings still apply to them. This fact highlights asymmetries in communication and suggests that there may be a non-resolved conflict.

One of the main reasons for this unbalance is the rigid mental framework of the family group, which prevents the establishment of an ideal speech situation. Fixed, socially constructed labels from childhood hinder the assessment of other speakers’ arguments based on the weight of reasons. This situation prevents collective consensus. Sincerity is scarce in family gatherings. When members are sincere, conflict arises. As a result, family members avoid key issues for the family and its relationship with the company (e.g. next-generation involvement). Informal communicative interactions are minimal. Accordingly, the family council serves as a space to conduct these critical conversations. However, the family members do not legitimise what is discussed on the family council nor take the outcomes seriously. Considering this evidence, the Nenia family is at the unbalanced extreme of silence (Figure 7).

Figure 7. Position of the Nenia family in the communication dimension

Source: Authors based on Olson’s Circumplex model (Olson, 2011) and Habermas (1982).

 3.3.3.Communication in Philia

In Philia, communicative acts fully meet the five criteria of an ideal speech situation. The level of trust between all family members is high, which is a prerequisite for the search for validity in discourse and freedom of expression. Respect permeates all communicative acts in Philia. There is so much respect in interactions that family members sometimes fail to express their feelings to avoid the potential discomfort of other members. This situation shows that although there is freedom of expression, some contributions remain in the background. Usually, the younger generation’s opinions are the ones that are overlooked. In practice, despite symmetry between speakers, decisions are primarily made by the 2G.

Philia is in a balanced position in all conditions, towards the lower end of the continuum (Figure 8). The interviews reveal some nuances of family communication patterns. For example, some issues that everyone is aware of have not yet been addressed. These issues include the addition of stepfamilies to the family council.

“We have an element to work on: my wife has a daughter, and this daughter is not a blood descendant. She feels excluded, but for me, she is my family” (Heracles, min 18).

Figure 8. Position of the Philia family in the communication dimension

Source: Authors based on Olson’s Circumplex model (Olson, 2011) and Habermas (1982).

 Findings

The right moment to establish a family council remains unclear. While some practitioners argue that the business family will always benefit from the family council, the literature suggests that business families usually start to think about the family council when family complexity increases. To bridge the gap between academia and practice, Eckrich and McClure (2012) explain that a family council must be built on solid family foundations.

Thus, as a family governance mechanism, the family council is not organically functional. Instead, the business family must first meet some minimum requirements. This paper explains that these necessary conditions are tied to the dynamics of the business family. Specifically, this paper advances the understanding of business family communication dynamics by answering the following question: What are the communication prerequisites to establish a functional family council?

This research advances the understanding of communication patterns in business families by identifying the necessary conditions for a functional family council. Specifically, if communication within business families is not well balanced, the family council may be counterproductive. Propositions 1 and 2 suggest the requirements for establishing a family council. Propositions 3, 4 and 5 suggest the requirements for ensuring the functionality of an existing family council.

When should a business family establish a family council?

Poza (2013) listed some prerequisites for the family council to be an effective decision-making governance structure. These prerequisites are defined as open and clear communication processes. This paper expands on that research, defining and evaluating the conditions for effective communication. It explains that the communicative acts of business families must meet minimum criteria of validity, intelligibility, symmetry, seriousness and freedom of expression. If these prerequisites hold and the criteria of an ideal speech situation are met, the family members will be more likely to understand each other. Understanding is the basis for consensus. It is therefore necessary for decision-making on family issues and involvement with the company (Pereira-Otero & Gallo, 2023). Unless these minimum communication standards are met, the business family will struggle to address complicated issues or make decisions on complex matters (e.g. succession and inclusion of in-laws and next-generation members).

Prop osition 1. Effective communication within the business family is contingent on meeting the five criteria for an ideal speech situation .

Practice-oriented guides on family councils state that it is always a good time to establish a family council (Beltrán, 2021). In this paper, it is argued that families should incorporate governance structures when desired. According to Frankenberg (1999), the family council provides an effective platform for facilitating discussions in the business family and reaching a consensus. However, building on Proposition 1, this study offers a cautionary message that it is only advisable to establish a family council when the family meets certain requirements. Otherwise, the results may be counterproductive.

If the family is unbalanced in terms of communication, the family council will be unlikely to have a positive outcome. For example, if communicative acts are not sincere or the opinions of other family members are not respected, the decision-making process of the family council will lack validity. As reflected by the case of Nenia, when families are at the extreme of silence, family members avoid interactions with other members, there are destructive communication patterns and individual interest is prioritised over family interest. In contrast, families that are at the noise end of the spectrum engage in endless conversations with no apparent purpose. In these two scenarios, although the family council provides a forum for family discussion, it fails in its purpose of providing a mechanism to reach a practical consensus. In both cases, the focus should be on what is not said. Inconsequential talk (or not talking at all) is a strategy for deviating from what matters, such as addressing unresolved conflicts deriving from previous generations or involving the next generation. The family must ensure that certain conditions regarding communication are met so that the family council effectively addresses relevant issues.

Prop osition 2 . A family council must only be established when the business family meets certain communication requirements .

Does the family council improve communication?

Numerous family-controlled companies have established a family council to dismantle the culture of secrecy instilled by preceding generations (Poza, 2013). The family council is believed to improve family communication (Labaki, 2011). However, the evidence supporting Propositions 1 and 2 refutes the idea that the family council always improves communication.

A family’s logic and communication patterns are often invisible and are shaped by different expectations and structures within the family and business contexts. In families with a family council, the family council unveils the interactions and communication patterns within the family. For example, some topics may not naturally be addressed by the family council if there is avoidant behaviour in the family. Such avoidance is exposed when members share space on the family council because it is where communication patterns become explicit. In contrast, when informal communication is fluid, it becomes explicitly fluid within the formal family council. Thus, the family council simply reveals communication patterns that had otherwise remained hidden. Accordingly, the research suggests that the family council improves communication in business families when the family group already starts from a balanced position in the communication dimension. This starting position means that the family is ready to leverage its communication dynamics. If a family is in an unbalanced position, the family council will simply make existing negative hidden communication patterns more explicit. This situation is described in Propositions3, 4 and 5.

Prop osition 3 . The family council does not naturally improve communication. Instead , it reveals hitherto invisible communication patterns with in the family.

What should a business family do when an active family council is not working?

When the family council does not work, it may be a symptom of the family’s lack of balance in the communication dimension (or cohesion and flexibility in the Extended Olson Circumplex Model). In such situations, the business family should identify its weaknesses by conducting a diagnosis based on three dimensions: cohesion, flexibility and communication. By identifying and labelling any unbalances, the family can effectively address the key issues it faces. This process is typically supported by an external consultant who provides advice and guidance to help the family achieve a balanced position. Returning to the original motivation of the current research, this family diagnosis can be regarded as the concept of “something else” that Eckrich and McClure (2012) identify as essential for a family council to function.

The theory suggests that the communication dimension can facilitate family stability and help with the transition from unbalanced to balanced positions. For this purpose, consultants can lead family members to work on self-awareness, emotion regulation, active listening and assertive communication. In fact, Ward (2016) suggests that developing these skills individually and together as a family is essential for family governance success.

Proposition 4. Families should undergo diagnosis to understand their cohesion, flexibility and communication , under the supervision of a consultant .

According to the family governance literature, a public space is needed for family members to interact and communicate effectively (Suess, 2014). If informal communicative acts are dysfunctional or non-existent, the family council provides such a public space, offering a formal solution to redirect communicative acts. For example, in a fragmented family where informal meetings have disappeared, a consolidated family council is the primary place for rebuilding family bonds. In an unbalanced business family, the presence of a consolidated family council can foster dialogue and enable the exploration of potential scenarios for reconciliation within the family. The family council becomes the public space for dialogue anda mechanism for starting to restructure the business family.

As explained by Olson et al. (2019), dialogue is crucial in therapy sessions to help families transition towards balanced positions in terms of cohesion and flexibility. In a consolidated family council, the therapy sessions that Olson refers to essentially equate to council meetings. Through proper training, the family council can potentially restore balance within the business family by making dialogue skills more effective. Doing so can in turn lead to increased comfort among members during family council meetings, resulting in greater satisfaction with the family council. Moreover, discussions within the group are likely to become more constructive and productive as a result.

To foster dialogue within the family council and ultimately rebuild family relationships, the family must legitimise the family council’s role. Members must have faith in its potential and recognise its long-term benefits, even if they may not be immediately visible (Suess, 2014). This long-term focus poses a challenge, particularly in a business environment where the emphasis is frequently on immediate results and where reward systems often lead to overstimulation. Nonetheless, legitimising the family council is the primary way of ensuring the functionality of the business family.

Prop osition 5 . The family council offers a space for dialogue to rebuild family bo nds . Through dialogue, unbalanced families can transition towards a balanced position.

Conclusions

This article explores the dynamics of business families and family governance, with a focus on communication. The literature does not explain when a business family is prepared to establish a family council and whether a consolidated council is functional. While some studies suggest that family size (Nordqvist et al., 2014) and complexity (Suárez & Santana-Martín, 2004) are key drivers of family council implementation, the situations that make it unadvisable to establish a family council remain unexplored. By extending Olson’s Circumplex model (Olson, 2011), this paper reports the study of three business families, identifying the communication requirements under which a family council can have positive outcomes. The Circumplex model has been used in the family business literature to show that unbalanced family systems are associated with dysfunctional practices in terms of commitment, performance and survival (Daspit et al., 2018). However, no study has explored the effect of unbalanced family systems on family governance. To fill this gap, this paper explores family communication dynamics (Michael-Tsabari & Weiss, 2015), revealing several key findings, captured in this paper as propositions. First, when business families think about establishing a family council, they must initially meet the five criteria for an ideal speech situation (Propositions 1 and 2). Second, when families are unbalanced and already have an active family council, they are urged to use the family council as a space for dialogue (Propositions 3, 4 and 5).

This study makes a dual contribution. First, it provides a conceptual framework to identify and categorise business family communication. This framework can help academics and consultants perform diagnoses of business families. Second, the study offers strategies to enhance communication conditions to meet the requirements for a functional family council.

The insights gained from this research are not limited to the academic literature. They are also relevant for practitioners and consultants working with business families. For instance, the findings highlight effective communication as a necessary condition for establishing a family council. Thus, communication diagnosis helps determine the family’s readiness for establishing a family council or identify the functionality of an existing family council. If the family is balanced on the communication continuum, establishing a family council makes sense. However, if the family is unbalanced on the communication continuum, then “something else” is needed. The consultant should thus identify the unbalanced dimension (cohesion, flexibility or communication) and work on the family members’ listening and communication skills so that they feel prepared for effective discussions on the family council. Otherwise, poor communication can disrupt family harmony (Michael-Tsabari & Weiss, 2015), preventing the family from reaching a balanced position.

This study has some limitations. For instance, the sample only included families rooted in the Spanish culture. Therefore, additional research should test these propositions in other contexts to determine their validity. Also, conducting retrospective research introduces potential biases such as post hoc rationalisation. To counteract such forms of bias, interview data were cross-referenced with other sources (Eisenhardt, 1989) such as archival documents, direct observations and testimonies from practitioners who knew the business family. Including informants from the same family provided a comprehensive and balanced view, reducing individual bias. Also, non-verbal communication was evaluated following a linguistics and psychological template to consider “possible emotional attachment” (Golden, 1992, p. 855) to the topics discussed.

Advancing the understanding of communication on the family council opens new avenues for future research. Considering the business family profile, we encourage authors to investigate how the level of heterogeneity among family members attending the family council influences the overall position of the business family. With family diversity being the norm, viewing the family council as a space for dialogue is imperative, as reflected by this journal’s conversation on cohabitating couples (Dyer et al., 2023). Crucially, different communication logics between family members can result in conflicts. Researchers should focus on the type of conflict (i.e. task, relational, process or status) in unbalanced families (Frank et al., 2011), while exploring how dialogue on the family council can help address each type of conflict.

Overall, this study offers a valuable resource for academics, consultants and practitioners working with business families. Its value lies in the insight it provides by highlighting the importance of communication prerequisites for family councils and by offering strategies to enhance family balance for positive outcomes.

Author contribution statement

The authors contributed equally to the work.

Conflict of interest statement

Declaration of interest: none

Ethical statement

The authors confirm that informed consent was obtained from all participants involved.

The authors confirm that data collection for the research was conducted anonymously and there was not possibility of identifying the participants.

Declaration on the use of generative AI in the writing process

During the preparation of this work the author(s) used ChatGPT in order to find synonyms and find alternative structures to express the same idea. After using this tool/service, the author(s) reviewed and edited the content as needed and take(s) full responsibility for the content of the publication.

Funding

The authors received no financial support for the research, authorship, and/or publication of this work.

Acknowledgment

We thank the editors and reviewers and the copyeditor, Adam King, for their valuable feedback and guidance. The first author would like to acknowledge the support provided during her postdoctoral phase by the contract for University Teacher Training (FPU2019/00426), awarded by the Spanish Ministry of Universities.

Data availability statement

The data that support the findings of this study are available from the corresponding author, M.R.G, upon reasonable request.

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