A New Golden Rule

Most of us know the Golden Rule:

“Do unto others as you would have them do unto you.”

But when it comes to family governance, another golden rule often prevails:

“He who has the gold makes the rules.”

When strong founders, patriarchs, or matriarchs with adult children make all family business and financial decisions unilaterally, they don’t prepare their spouse or children for their future responsibilities. Enabling spouses and children to participate in planning and decision making through family governance helps to prepare them.

It’s often hard for successful people to see the importance of family governance. They typically became successful by making good decisions, working long hours, sacrificing for their families, and trusting their own judgment. Family governance involves other family members in planning the family’s future.

In contrast, setting up a trust to pay annuities to adult children, distributing profits to help them out, or giving them gifts so they can follow their dreams may seem like loving acts. Yet those acts often signal misguided generosity, gifts that may give too much while demanding (and teaching) too little.

Good family governance is participatory. It promotes goal setting, planning, accountability, and decision making. It sets appropriate expectations of each family member regarding the family’s business or assets.

So, we’d like to propose an alternative to the Golden Rule and its cynical spinoff:

He who has the gold must promote good governance.