The script we all know
We’ve all heard the story: a family business decides to “professionalize.” They hire a top-tier CEO, assemble a board with impressive names, bring in international consultants and executive coaches. On the surface, it looks like the exemplary path to modern corporate governance. But behind the curtain, a very different play unfolds.
The reality is brutally simple: when real power never left the founder’s office — or that of their heirs — everything else is just expensive scenery. And in many family firms, particularly across Latin America, this performance repeats with alarming frequency.
The anatomy of an impossible decision
Consider a real case: a family business among the ten largest fortunes in its country. The board hires an elite international head-hunter who flies in to define, meticulously, the profile of the ideal CEO: international experience, a prestigious MBA, a proven track record. The consultant presents a shortlist of exceptional candidates. None is chosen.
Each director then proposes “their” candidate, none meeting the agreed requirements. It goes to a vote and anyone wins. But the story doesn’t end there: the owner’s private coaches suggest the board got it wrong, and suddenly a completely different candidate appears, out of nowhere.
The cost of this circus is devastating. Head-hunters and advisors charge tens of thousands of dollars, if not more. Directors collect generous stipends for meetings where their recommendations will be ignored. Personal coaches bill for advice that systematically undermines the formal decisions. Fifteen senior candidates have been interviewed and exposed to the market. Everyone sees that, in the end, someone was chosen who looks nothing like the stated profile. The reputational damage is immense. The good candidates won’t come back.
The problem isn’t the family; it’s institutional cowardice
Why does this happen? There are two explanations, both devastating. The first is obvious: the family or the controlling owner simply isn’t willing to let go of real control, even after installing all the paraphernalia of professional corporate governance. They want the legitimacy of modern structures without ceding the power those structures imply.
But there is a second, even more toxic explanation: the collective inability to agree. Board members, coaches, advisors — all have different agendas, and none wants to be the one to bell the cat. No one dares to name the elephant in the room: that the process is a charade, that they are taking fees to take part in corporate theater, that the real conflict over who controls the company is never addressed directly.
This organizational schizophrenia generates costs far beyond the wasted money. First, it destroys the board’s credibility within the organization. Executives quickly learn that formal decisions are expensive theater. Second, it systematically drives away the best executive talent. Third, it creates a culture where no one takes real responsibility for decisions, because everyone knows they will be modified by invisible parties.
The business of cosmetic governance
Here an uncomfortable truth emerges: there is a whole industry that lives off this charade. Head-hunters and advisors who charge small fortunes for processes they know won’t reach a good end. Directors who accept positions knowing their voice will be merely decorative. Coaches and consultants who bill for advice that perpetuates the problem instead of solving it. Everyone has an incentive for the theater to continue.
The question, then, is not technical but moral: are these professionals really serving the company, or are they being paid to take part in a simulation that systematically harms the organization?
Toward honest governance
The solution is not to eliminate family influence, nor even necessarily to reduce it. The solution is brutal institutional honesty. If the family wants to keep absolute control over strategic decisions, let them say so openly and design structures that reflect that reality. If there are unresolved conflicts over who controls what, put them on the table and resolve them explicitly — before spending tens of thousands of dollars on processes doomed to fail.
Transparency about the real model of power makes it possible to attract executives who accept working in that specific context. It makes it possible to hire only the advisors who genuinely add value. And above all, it makes it possible for those who make the real decisions to take full responsibility for the results.
For reflection in your family business
How much have you spent on consultants and director fees in the last three years? How many of those recommendations were actually implemented? Does your board make real decisions, or merely validate decisions already made elsewhere? Are there unresolved power conflicts no one dares to mention? And the most uncomfortable question: how many of your advisors would keep collecting fees if you decided to face, honestly, how decisions are really made?
Corporate governance in family businesses doesn’t fail for lack of structures or advisors. It fails for lack of brutal honesty about how power really works.
P.S. The next time your company hires an international head-hunter or adds another director, ask yourselves a simple question: are we genuinely willing to implement what they recommend, or are we paying for peace of mind? An honest answer to that question will save you a lot of money and a lot of reputational damage.