The Governance Gap

You've sat on other boards and you know what an independent director is for, and the governance at your own family's company still isn't working. Governance means who gets to decide what, and who can say no to them. The gap is that the tools on the shelf were built for someone else, and while the shelf gets consulted, the loudest person at the table is deciding.

Corporate governance is built on a clean split: owners over here, managers over there, a board in between whose only tie to either side is its fiduciary duty. In a family company none of those lines holds. The owners run the business. The board has a brother on it. The conversation in the boardroom is the same conversation as Sunday dinner. Some families make a framework built for clean lines work; most file it and run the business the way they did before, because following it would mean pretending to be something they aren't.

So the work starts before any structure, with a question the family hasn't answered out loud, or answered on paper and never at dinner: what is this business for? To stay in the family. To return the most money. To carry the founder's name and his way of doing things. Returning the most money and keeping it in the family can't both win, and if you don't decide which one does, the loudest person at the table decides it later.

Even a settled answer holds only as long as the siblings believe each other will keep to it. Without trust, everything is a "no." You can have a charter and independent directors, and if the siblings don't trust each other, every board decision gets reopened at dinner. Trust building is making promises and delivering on them. You have to take chances.