Judgment

Yesterday’s Financial Times carried a timely reflection by Richard Moriarty under the striking headline: “Boards must feel they can think for themselves.” The observation extends well beyond listed companies and offers useful lessons for families in business.

Over the years many family enterprises have invested considerable effort in writing governance manuals, drafting family charters, and establishing councils and boards. These instruments are valuable. They clarify roles, reduce ambiguity, and provide a roadmap for how authority and decision making should be organised across generations. Yet they should be viewed as guides rather than shackles. Governance documents are meant to orient judgment, not replace it.

Moriarty’s reflection invites several practical lessons.

First, no manual can anticipate every situation an enterprise will face. Markets evolve. Ownership evolves. Leadership evolves. When rules begin to replace judgment, governance risks becoming mechanical.

Second, a board represents the interests of investors while safeguarding the long term health of the enterprise. Its role is not to administer procedures but to exercise independent judgment in the stewardship of the company.

Third, explanation strengthens authority. When a board chooses a path that differs from established practice and explains its reasoning clearly, it signals that the decision was deliberate and grounded in the realities facing the business.

Fourth, flexibility does not mean arbitrariness. Directors remain bound by duties of care, prudence, and good faith toward the enterprise and its investors.

For families in business the balance is essential. Governance frameworks organise the system and manuals provide orientation, but the continuity of an enterprise ultimately depends on something deeper: the discipline of judgment exercised by those entrusted with authority in the service of the enterprise and its owners.

W.