Unlike MTW1, you don't have to worry too much about faction hiers. You get inventations to recruite family members based on the number of regions you conquer. The more regions you have the more family members (aka heirs) you have.

Generally, family members are useless at gouverning. I use them as shock troops mainly. They easily outdo most knights, so it's even economical to use them instead of building a lot of heavy cavalry.
They tend to develop bad traits real easy, so I find that they're more useful on the battlefield.