The Governance Gap

The governance gap in family enterprise is not a knowledge problem. The families I work with are not unaware that governance matters. They have read the literature, they know the terms, some of them have served on the boards of other companies where governance worked exactly as it was supposed to. The gap is something else: the tools that exist were not designed for them.

Corporate governance frameworks were built with publicly traded companies in mind. They assume a clean separation between owners and managers, between the board and the executive team. In a family enterprise, these are not separate categories. The people who own the business are often the people running it. The board includes people whose primary relationship is not fiduciary: it is filial. The conversation in the boardroom is continuous with the conversation at the dinner table.

The family enterprise needs governance that can hold the business and the family at the same time. That is a different design problem.

What works in this context is governance built around the specific dynamics of the family: the relationships, the history, the things that cannot be said in the room, the decisions that keep getting deferred. This usually means starting not with a board structure but with a conversation about what the family is actually trying to accomplish. Is the goal to keep the business in the family? To maximize financial return? To build something that represents the founding generation's values? These goals are not always compatible, and the governance structure has to be honest about that.