Resolving Family Business Conflict
Conflict is an inevitable aspect of any business. Yet conflicts are made all the more complex when you bring family into the equation. As David Harland, managing director of FINH notes, “when colleagues and employees are also family members, ordinary conflict can take on new dimensions.”
Family dynamics complicate matters, particularly when no two families are the same.
Every family has their own unique tensions and disagreements that colour how things are done within the business. But there are still some common conflicts that arise within family businesses. Intergenerational tensions and sibling rivalry can make it difficult for individuals to see eye to eye. This can be further exacerbated by favouritism or nepotism, where imbalanced expectations for each family member brews resentment. Favoured individuals might feel overwhelming pressure, while their overlooked family members might feel undervalued. The more assertive family members may even create power struggles within the business by vying for authority and control.
Each family member has their own perspectives and expectations for their role within the business, which can create misunderstandings if these views aren’t properly expressed. These are the many ways conflict can arise within the family business. Shockingly enough, according to a PwC survey, 70+% of family businesses don’t have a formal process in place to manage these conflicts.?
Here are some stages of conflict resolution that can help mitigate rising tensions amongst your family:
Conflict prevention––There are plenty ways to prevent conflict within a family business. One of the biggest things you can do is set boundaries. Unfortunately, the line between the personal and professional in family business will inevitably blur whether you like it or not– family members will always be keen to discuss the business at family gatherings. Creating a work-life balance is still possible when done with intention. Actively schedule family events devoid of any business talk to celebrate holidays or big life events, or simply to spend quality time together.
After all, you’re a family first and a business second.
Remember to let loose and have fun together once in a while without the strains of the business weighing you down. When you do have regular business meetings, clear communication goes a long way in avoiding conflict. Transparency surrounding roles, responsibilities, expectations and values helps align everyone to the business’ main purpose.? Keep everyone up to date on any changes and. Book neutral spaces for family business meetings and give everyone plenty of opportunity to air their concerns as they arise. When everyone feels heard, you’re able to manage issues when they’re addressed, thus preventing tensions from bubbling to the surface.
Resolving rising conflict––An intentional structured approach to conflict resolution can keep conflict from escalating further. A key piece in this is training and development for family members in both conflict resolution and emotional intelligence.? Building everyone’s empathy lets family members understand one another better on an emotional level. Meanwhile, self-awareness helps individuals identify their emotional triggers to better control their responses to certain events or decisions made.? Open communication is also something that doesn’t always come naturally.
Learning to communicate empathetically with transparency and honesty ensures everyone is on the same page and feels heard.
Mediation and the formal conflict resolution process––When a conflict can’t be resolved within the family, it may be necessary to bring in a third-party advisor to help settle matters. A?independent,?neutral facilitator can lend an objective perspective on the situation. They can talk to each family member in separate one-on-ones to get the big picture and gage any potential areas of agreement. This big picture approach lets them see things from all angles and have the family come up with alternatives they might not have been able to see on their own due to emotional intensity, blind spots, or biases. When all relevant information is gathered, the?facilitator can support the family as it ranks the importance of each priority and identify a resolution that will satisfy everyone involved. It’s also okay to have regular proactive meetings with a facilitator to prevent tensions from building into something more.
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You don’t need to wait for a situation to become dire to bring in extra help to maintain family harmony.
Future planning for long-term harmony––According to SCORE, 47% of family business owners intending to retire in 5 years have no successor in mind. This is one of the many discrepancies in business planning that can lead to power struggles, and thus leaves the family business vulnerable to rising conflict.
Without any formal succession plans, only two-thirds of family businesses survive past the first generation.
Having a plan in place creates clarity, where everyone better understands the future vision for the business. Engaging the next generation as early as possible sets up potential options for a future successor. Investing in their interests and skillsets is also an investment in the business’ future and allows everyone to engage with the business in a meaningful way. When everyone can envision their purpose within the business, and this is understood between family members, it’s less likely to cause interpersonal issues.
Managing conflict within your family business may seem daunting, but it’s an opportunity to strengthen both your family and your business. By being proactive in your conflict resolution process, you can create an environment where everyone feels valued and heard. Whether it’s preventing misunderstandings, addressing tensions head-on, or seeking outside mediation, the tools for maintaining harmony are within your reach.
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Further Reading
5 Steps to Overcome Conflicts in the Family Business, Guthrie Jensen Global Training Consultants
Managing conflict in a family-owned business, Baker, Tilly
Business Exit Strategy Guide for Owners: Dealing with Conflict in a Family Business & Preserving Harmony, Interim Execs