What is a Family Protocol and why is it important?

 

The process of professionalization is the right time for its holders, in the case that they are more than one and they are also members of one or more families, to agree on certain rules that act as a framework for the relationship between them. This manifestation of the shared will is what is called the Family Protocol.

 

It is a written and consensual document which aim is to establish guidelines to follow in topics such as: a) the governance model of the company, b) the policy of succession in managerial roles and that integrate the model of government, c) the criteria for the entry of family members into the company, d) the remuneration policy of the holders who work in the company in management roles, e) the policy of results distribution, in terms of reinvestment and dividends, f) the scheme for decision making in different areas, g) policies for the transfer or assignment of shares, h) the procedure to follow for the modification of the agreements.

This enumeration does not intend to exhaust the possible contents of a protocol, but to illustrate them, so that its nature can be identified.

Its drafting and development can give rise to tensions among members, because often the contents of an unwritten protocol have been taken for granted, and the opening of a space for reflection for its formalization in the future may lead to divergences. Given this mixture of property, work and family ties, which occurs in a family business, an environment of informal or tacit agreements is created. After a bit of digging, this may show fissures.

These are issues that are often not spoken. Therefore, if the protocol can be formalized, it is worth going through difficult terrain, after which the owner group will be strengthened by the clarity of the agreements that will clear doubts and fears.

The important thing to achieve success is the spirit with which it is carried out and the willingness of the parties to provide criteria that lead to an absolute consensus.

There is no standard or unique protocol, but it is specific to each company according to the will of their respective owners. The signature is a clear manifestation of an explicit agreement about the courses of action to follow in the situations that will emerge in the future.

Although the SMEs that have this agreement represent a minority, more and more owners of SMEs are adopting the initiative, as a result of the dissemination of this instrument.

The umbrella of the process of professionalization is a good moment to carry it forward, because it offers a context that allows to understand as natural and logical the formalization of a protocol among the owners of the company.

There is no sense in a protocol that can not adapt to the evolution of the company and its owners. Therefore, among its contents it is good to include a point referring to procedures to follow for the modification of the agreements. This gives it flexibility and validity. Of course, the spirit of a consensual will among the holders should always prevail.