As families grow and become more diversified, the question inevitably arises: how do we create a fair and effective system for making decisions? How to have difficult but necessary conversations without stepping into a major conflict?
This is a question we hear constantly from successful, responsible families. It comes from a place of deep care, and let’s be honest, a good deal of anxiety. The informal, trust-based system that worked at the kitchen table for one generation suddenly feels fraught and inadequate for three. The very culture that built the wealth now seems ill-equipped to sustain it.
When this concern surfaces, the advice families often receive is logical and well-intentioned: start holding regular family meetings, and if necessary, draft some simple guidelines or a basic family council structure.
It’s sensible advice, and taking it shows a real effort to be more inclusive and organised. A consistent rhythm of communication is almost always better than the spontaneous, fragmented chats that happen in hallways or WhatsApp groups.
But for families managing multi-generational wealth, shared assets, and complex business operations, this first step often opens the door to deeper, more difficult questions. The truth is, for a family that’s scaling in both size and complexity, this “simple” advice rarely holds. It’s like applying a fresh coat of paint to a house that needs structural repair.
Informal meetings and basic guidelines are, as research shows, built to fail under pressure (González-Cruz, Clemente-Almendros and Puig-Denia, 2021). The family’s internal organisation simply isn’t complex enough to handle its external structure. What was once an advantage — the family’s informal, agile nature — can become the very thing that causes frustration and, eventually, failure.
The Predictable Failures of Simple Guidelines
When a family grows, natural occasions for interaction diminish. People are geographically and generationally dispersed. Those regular meetings, if they happen at all, often yield incomplete and frustrating results.
Why? Because they lack the structure to handle the real issues.
First, informal systems are prone to conflict avoidance. In an unstructured setting, the desire to preserve the illusion of harmony is overwhelming. Difficult topics are postponed, disagreements are smoothed over, and misunderstandings are left to fester beneath the surface. Or, solutions are swiftly found without understanding the issue deeply or appreciating the tension caused by the paradox. The result is a ceasefire instead of peace that allows unresolved tensions to jeopardise the entire family and business.
Second, they lead to paralytic decision-making. When there’s an unspoken assumption of equal management rights in the family but no defined process for reaching a conclusion, you get endless, frustrating discussions. The system becomes personality-driven rather than institutionalised, meaning the loudest voice, or the founder’s voice, often wins by default, not by agreement.
Finally, they have no container for emotional spillover. When you’re trying to discuss a dividend policy, but the meeting is really about historical baggage from 20 years ago, the “family stuff” spills over and sabotages any hope of a productive business conversation.
The Surprising Truth About Fairness
The core of the problem lies in that one word from the original question: “fair.”
Most families equate fairness with equality. This is what researchers call distributive justice: everyone gets an equal outcome or an equal say (Colquitt et al., 2012).
The uncomfortable reality is that in a complex family enterprise, this is near impossible to achieve. The system is constantly being pulled apart by two conflicting, and equally valid, logics: the egalitarian logic of the family (where everyone is treated equally because they are loved) and the meritocracy logic of the business (where roles and rewards are based on competence and contribution).
An informal meeting cannot reconcile these two worlds. It will always feel unfair to someone.
The data shows something surprising: family harmony and commitment are not primarily dependent on members getting the outcome they want. Instead, harmony is built on procedural justice. This is the deep-seated belief that the process for making a decision was fair, transparent, and consistent.
What’s the most critical component of a fair process? Voice. The deep-seated human need to articulate your opinion and feel that it was genuinely considered by the group, even if the final decision goes another way.
Simple guidelines don’t create a process. They don’t guarantee voice. They’re just suggestions. A truly effective system institutionalises this fair process, protecting the voice from being drowned out by emotions or authority.
A Test Case: The In-Law Dilemma
Let’s look at the in-law issue mentioned in the original question. An informal system almost always defaults to exclusion. Spouses are treated as outsiders, kept out of meetings to protect the family or the business.
This strategy predictably backfires. It doesn’t prevent conflict; it just moves it. It creates information silos and places an immense emotional burden on the direct family member. That person is now caught in the middle, pressured by a spouse who is understandably frustrated and uninformed, trying to translate complex issues they may not fully grasp themselves. Exclusion corrodes relationships and blocks the candid insights that an objective, skilled in-law might bring.
A process-driven approach, by contrast, asks: “How do we structurally integrate in-laws to provide voice while respecting boundaries?”
The answers are specific and measured. It’s not an all-or-nothing proposition. It might mean creating non-voting or observer seats on the family council. It might mean inviting in-laws to join specific committees, like philanthropy or family events, where their skills and passions can be channelled. Or it might mean creating a formal, merit-based Family Employment Policy, which defines the clear experience and education requirements for any family member (including in-laws) who wants to join the business.
This is harder than just having a meeting. But it actually works.
Better is Achievable: Moving from Guidelines to Governance
If simple guidelines are the problem, what is the measured solution? Progress happens in inches, not miles. It’s not about commissioning a 50-page document that sits on a shelf.
In fact, research shows the process of creating a governance system is often more important than the final document itself (Montemerlo and Ward, 2011). It’s the act of structured, facilitated dialogue—where everyone gets a voice—that builds the trust and consensus.
The path forward involves building blocks in a logical order:
- Start with Values, Not Rules. The first building block is not a council. It’s a facilitated dialogue to define the family’s shared principles, values, and long-term vision. This becomes the “why” that anchors every future decision.
- Build the Forum (The Family Council). Then, you create the Family Council. This is the structure: the dedicated, representative forum for communication and conflict resolution. This is the “where” and “who” of your fair process.
- Create the Framework (The Family Constitution). The council’s first job is often to develop the Family Constitution. This is the regulatory framework: the “what” and “how”. It codifies the rules everyone agrees to live by.
For families needing immediate stability, the research points to three policies that provide the most value right away: a Family Employment Policy to manage the conflict between merit and nepotism; a Succession and Ownership Policy to clarify the single biggest trigger for family conflict; and a Conflict Resolution Mechanism to stop avoidance and move disagreements from emotional reaction to institutional dialogue.
The Real Goal: Making Conflict Productive
Here is the final, quietly revolutionary truth: The goal of family governance is not to prevent conflict. That is a false promise.
The uncomfortable reality is that conflict avoidance is what destroys families. It allows small issues to fester beneath the surface until they become destructive, personal, and explosive.
A strong governance system does something far more valuable: it contains conflict. It provides a safe, predictable structure where families can engage in productive disagreements without allowing them to spill over into personal relationships.
Your family’s informal system is perfectly designed for the frustration you are currently experiencing. Improvement is possible, but it requires acknowledging that the old tools are no longer enough. The real work is building a new, more robust process: one that is fair, transparent, and strong enough to hold your family together for generations to come.
References:
González-Cruz, T., Clemente-Almendros, J.A. and Puig-Denia, A. (2021) ‘Family governance systems: The complementary role of constitutions and councils’, Economic Research – Ekonomska Istraživanja, 34(1), pp. 3139–3165. doi: 10.1080/1331677X.2020.1867603.
Colquitt, J.A., LePine, J.A., Piccolo, R.F., Zapata, C.P. and Rich, B.L. (2012) ‘Explaining the justice–performance relationship: Trust as exchange deepener or trust as uncertainty reducer?’, Journal of Applied Psychology, 97(1), pp. 1–15.
Montemerlo, D. and Ward, J.L. (2011) The Family Constitution. New York: Palgrave Macmillan. doi: 10.1057/9780230116214.
