Corporate governance and family governance share a word. They share almost nothing else.
One was built for companies. It answers outward, to people who have a stake in the business but do not control it: shareholders, regulators, the market. Its job is to protect those outsiders in a business they do not run. Control from the outside in.
Family governance runs on the opposite logic. The family builds it, for itself, to stay in control of what it owns. A purely internal tool. A family answers to no one but itself.
Apply the corporate model to a family, and governance slowly begins to serve the structure instead of the family. The office grows. The experts multiply. The family, the owner, loses sight of what it built.
Same word. Two different things. Mistaking one for the other is how families lose what they spent a lifetime, or several, building.
In the family offices we support, it is a recurring pattern. So my partners at Westwick and I put it down in writing. We hope it sparks the same intense debates we had when we tested it on our own families.
Further reading: a practical guide to family governance — Westwick's white paper on governing single family offices.
Frequently asked questions
What is the difference between corporate governance and family governance?
Corporate governance was built for companies. It faces outward and exists to protect people who have a stake in a business but do not control it: shareholders, regulators, the market. Family governance is the opposite. A family builds it for itself, to stay in control of what it owns. One controls from the outside in. The other is a purely internal tool. They share a word and little else.
Why should a family office not simply adopt a corporate governance model?
Because the corporate model is designed to protect outsiders, not to keep the family in charge. Applied to a family office, it slowly makes governance serve the structure rather than the family. The office grows, the experts multiply, and the owner loses sight of what it built. Family governance should keep the family in control, not hand control to the structure around it.
This article is part of our series on family governance. The reference piece for the series: Governing Families, Not Corporations — the Westwick white paper.