By Henry Maksoud Neto  ·  11 August 2026

What Nobody Writes About Family Governance

You Can Hire a Person You Cannot Fire

Most writing on family governance describes the solutions. This describes what actually breaks, and why almost nobody writes it down.

Everything I am about to write is obvious. That is the problem with it. It is obvious in general and invisible in your own house, and I have almost never seen it written down.

There is a reason. To write it honestly, you have to describe people who are alive, who are family, and who will be at the table on Sunday. So the subject stays polite. Most writing on family governance talks about family councils, shareholder agreements and independent boards. Those things matter, but they are the answer to a question nobody has asked out loud yet. It rarely describes what actually breaks.

I have lived through and seen every one of these from the inside.

There is really only one failure, repeated in different forms. There is no line between the company and the family. Governance is nothing more than that line.

None of this comes from carelessness. Every one of these arrangements was put in place by someone who was building something, usually under pressure, and usually right at the time. They are the natural shape a company takes when the people running it are also the people who love each other. That is why they are so hard to see from inside, and why the person who ends up paying for them is the owner himself.

The line is not a document. It is a set of answers to three questions that most family companies never write down. Who decides what, and with what authority. Who is measured, and against what standard. Whose money is whose.

When those answers exist, the company can be governed by people who did not grow up in it. When they do not exist, the company can only be governed by the family, and only by the family members who remember how things have always been done. That is not governance. That is memory.

What follows is what happens when the line is not there.

People

You can hire a person you cannot fire. That one sentence explains most of what goes wrong.

Relatives are placed in key positions because a job was needed, not because a role was open. That order matters more than it appears. When a role is open, the role exists first and the person is measured against it. When a job is needed, the person exists first and the role is built around them. There is no qualification to meet, so there is no standard to fall below, so there is never evidence for a decision. The person cannot be removed for underperformance because underperformance was never defined. Years pass and everyone knows the situation is wrong, and nobody can point to the moment it became wrong.

The pressure to create these positions often does not come from the person who needs the job. It comes from someone senior in the family who is asking on their behalf, and who is not easy to refuse. A relative by marriage cannot find work anywhere else. The request arrives quietly and then arrives again, and it is not really a request about employment. It is a request about the family. So the owner finds a place. Normally you have a shoe and you look for the foot that fits it. Here you have the foot, and you go looking for a shoe. The position is invented backwards, and everyone in the company can see that it was.

The cost is not the salary. The cost is that the position is blocked. Everything that should flow through that seat now flows around it. The organization builds informal paths to work despite the person, and those paths become the real structure of the company, invisible on any chart.

There is a second cost, and this is the one that spreads through the whole company. Once a family member is visibly not performing and nothing happens, meritocracy is no longer available to you. You cannot measure people against a standard that one person is exempt from. The exemption is not a small exception to the rule. It is the real rule, and everyone reads it correctly.

What you have then is a company with two populations. One is evaluated and one is not, and everybody knows which is which. That imbalance does not stay quiet. It shows up in what people are willing to give, in what they are willing to say, and in how seriously they take anything the company announces about performance. Merit cannot be introduced later either, because the exempt person is still there. Nothing can be built on top of that while it remains in place.

In one company I know, a family member held no position at all. Every day he walked from department to department, checking on people, asking what they were doing. The staff had a nickname for him. They called him the butterfly, because he landed everywhere and settled nowhere. That nickname is the entire situation in one word. Everyone understood it precisely, everyone described it accurately, and nobody could say it to him. He supervised people who were not able to question him, on behalf of no role, answering to no one. And the department had to stop and receive him, because of who he was.

Some of this happens without the owner knowing. He is occupied with the business, which is what an owner is supposed to be occupied with, and beneath him the system is quietly rearranged by people using his name. An heir asks for something and does not need to make a threat, because the question is enough. Do you know who I am. Nobody says no, nobody reports it, and after enough repetitions it stops being an incident and becomes how things are done here. The owner is told none of it. He would be furious if he were, and everyone below him knows that, which is exactly why he is not told. What he sees is a company that runs. What has actually happened is that a second authority has grown inside his own, built entirely out of his name.

Employees stay because they are sacred cows. Long service becomes its own protection. They know things, they were there before, and removing them feels like an act against the family's own history. In a company built over generations, loyalty is genuinely valuable, which is why this is difficult rather than simple. But loyalty and capability are different things, and when the first is used as evidence of the second, the company stops being able to tell them apart.

Others stay for a simpler reason. They have learned to say that the owner is brilliant. In a family company that is close to a job description, and it is not always false. Many owners are genuinely exceptional, and the company exists because of judgment nobody else in the room had. So the owner has real evidence for believing the praise. The problem is not that he is praised. From inside that room there is no way to tell the times he was right from the times nobody was willing to say otherwise. Nothing in the structure gives him that information. Nobody in the room is paid to say no.

Merit was never the criterion. That is why meritocracy cannot simply be introduced later. Introducing it insults everyone who arrived under the old rule, including people who have served the family well for thirty years. This is the reason it is postponed, and postponement looks reasonable every single year.

That is not governance. That is memory.

Money

The company becomes the family wallet. Almost always through habit. Expenses move in both directions until no one can say which side paid for what. The family pays for things belonging to the company, which feels generous, and the company pays for things belonging to the family, which feels harmless. Both directions are the same mistake.

The consequence is larger than the amounts involved. Once the flows are mixed, the company can no longer be measured. You cannot say whether an operation is profitable, because you cannot say what its real costs were. You lose the instrument you need in order to know how you are doing, and you lose it silently, years before you need it.

Heirs live at the level of the business rather than at the level of what they earn. The company is large, so life is large. Nobody connects the two until the company stops being large. What has really happened is that the family's cost of living has become a fixed obligation of the company, while the company's earnings remain variable. Nobody ever decided this. It accumulated.

The name of the company is used for private ventures. Its reputation, its credit and its relationships are borrowed by individuals and never repaid. Counterparties cannot tell where the company ends and the individual begins, and in a dispute, neither can a court.

And underneath all of it, nobody knows the real debts. Liabilities build quietly across tax, labour and personal guarantees. In a family company the person best placed to know is often the person who created them, which is exactly why the number is never assembled in one place. Each obligation was reasonable when it was taken. Nobody has ever seen them added up. They will be added up eventually. The only question is whether it happens on your terms, or by someone sitting across the table.

You can hire a person you cannot fire, and you can also acquire one who was never hired.

Decisions

Decisions are centralized and vertical. One person decides everything, which looks like speed in good years and is a single point of failure in bad ones.

Centralization also trains the organization. When every decision goes up, people below learn not to decide, and after enough years they lose the capacity to. So when the owner finally wants to delegate, whether by choice or because a crisis leaves him no alternative, there is nobody prepared to receive it. He concludes that he cannot delegate because there is nobody ready. He is right about that. What is hard to see from where he sits is that the condition was produced by the structure, not by the people available.

The board exists on paper. It meets, it signs, it does not govern. Look at who sits on it and you understand why. The family members are the ones who agree. The independent members are a minority, which is obvious to everyone, and they were selected because they already agreed with the majority. The same rule that fills the payroll fills the board. So the board is not a place where the owner is tested. It is a place where the owner is confirmed. Everyone involved knows this and nobody says it.

This is discovered from outside, never from inside. The moment a lender, a buyer or a court asks what the board actually examined and when, the minutes answer the question by themselves.

Authority also arrives without being granted. Someone close to the owner starts giving instructions. They hold no position, have no mandate and answer to no one, yet the instructions are obeyed. It is the same sentence in a new form. You can hire a person you cannot fire, and you can also acquire one who was never hired. The owner does not correct it, because the cost of correcting it is paid at home and the cost of leaving it is paid at the company. Those are two different currencies, and only one of them is visible at dinner. The bill goes to the company, and the company has no way to present it to him.

What follows is the same selection rule appearing once more. Employees who want something learn to bring it to the person with access rather than to the person with responsibility. So the matters that receive attention are not the important ones. They are the ones that reached the right ear. Meanwhile a manager overruled in front of his own team is finished, and nothing records that either. There is no forum to raise any of it, because officially none of it is happening.

Accounting is treated as an obligation to be filed rather than an instrument to be read. The numbers are produced correctly and on time, and then nobody in the family reads them for the purpose they were built for. The result is that the family knows the company's revenue and does not know its result. Decisions get made on the two indicators everyone can feel without training: how busy the operation is, and how much cash is in the bank. Both can look reassuring for a long time while the underlying position deteriorates.

And decisions are made in conversation. At lunch, on the phone, in a corridor, and never written down. Years later, when the decisions have to be explained to someone outside the family, there is no record of why anything was decided or by whom. The reasoning existed. It was good reasoning, often. It simply lived in one or two heads, and it cannot be produced on request.

None of this costs anything in good weather.

None of this costs anything in good weather

That is the real reason it is never fixed. While money is coming in, every one of these arrangements works. They are not experienced as risks. They are experienced as how the family does things. Anyone proposing to change them is not proposing an improvement. They are proposing a criticism of people who are present.

Then conditions change, and everything built for good weather is tested at once. This is the part that is hard to imagine in advance. These failures do not arrive one at a time, and they are not independent. Each one removes the instrument you would have needed to handle the others.

The people who could not be fired are still there, and now the payroll matters. The debts that were never assembled arrive assembled. The board that never governed cannot begin governing in front of lenders, courts or buyers. The accounts that were never read cannot suddenly explain the position. The decisions that were never recorded cannot be defended. And the person who decided everything is now the only person who can carry it, facing counterparties who are organized, advised and unhurried.

That is the moment the owner discovers he is alone.

I am not writing this as advice. I am writing it because I lived inside it, and because I have rarely seen it described. If you recognize your own company here, that recognition is worth more than any governance manual, and it is available to you now, while there is still time to use it.

Putting the line in place is slow work and it is uncomfortable, because it means telling people close to you that the rules have changed. Nobody who has done it will tell you it was pleasant. It is far easier to do in good weather, and good weather is precisely when nobody believes it is necessary.