The philosophy and principles of family governance

A successful family system is not only measured by their wealth and legacy. Instead, well-run families are often those who follow three guiding principles that encourage trust-building, responsible use of power and open communication among all stakeholders. 

What you need to know

  • Anyone familiar with a family office will know that managing family dynamics are key to a well-governed family and like in any organisation, culture is established from the top down.
  • While a successful family system is measured by more than just their wealth, how well that wealth is sustained comes down to the matter of how the family works.
  • Good family governance oversees how the family is run and can prevent conflict between generations, but can also foster a healthy culture amongst all stakeholders.
  • Applying three guiding principles that encourage honest communication, responsible use of power and the notion of stewardship over ownership can lead to a well-governed family unit.
Governance Updated on October 21, 2022

Leo Tolstoy famously wrote in Anna Karenina that “All happy families are alike; each unhappy family is unhappy in its own way”. One could paraphrase this by saying that all well-governed families have certain things in common, and poorly governed families always find new ways to mess things up. In any organisation, culture is largely established from the top down. This principle can apply to families organisations, companies, and even countries. However, it relates especially to good family governance because there is a natural hierarchy of power that skews toward the incumbent generation, and attempts by the rising generation to drive cultural disruption can lead to all manner of conflict.

The principles of good family governance

Good family governance helps to create a well-run, trusting family office and encourages responsible and honest behaviour amongst all stakeholders. These principles relate to the idea of stewardship over ownership, healthy communication and the considered use of power.

About the Authors

David Werdiger

David Werdiger

Family governance & succession planning

David Werdiger is a 2nd generation family member, tech entrepreneur, non-exec director, philanthropist, thought leader now applying all that lived experience to help other family offices.

Connect with David Werdiger

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