Working with your nearest and dearest in a family business can be incredibly rewarding. After all, you get to share your corporate successes with your family, and everyone can prosper from this. But at the same time, having to navigate family dynamics and emotions in a professional environment can quickly spiral into conflict.
In this blog, we’ll help you navigate conflicts in family business. We’ll cover everything from common causes, to proactive strategies for resolution, and when you should call in a pro.
Common Sources of Conflict
Considering that a family business often blurs the line between professional and personal relationships, there can be a number of different ways for disputes to emerge in the workplace. Generally, conflicts in family business can be broadly divided into two main categories – the personal, and the professional.
Personal issues
One of the most common conflicts in family business has to do with perceived favoritism and the jealousy this causes. Nepotism, in particular, can lead to a host of issues like competition that devolves into bitter rivalries, and power struggles that can interrupt business operations and relationships.
Any conflicts between family members can spiral to affect other employees, as well as suppliers and customers. In worst-case scenarios, this can transform your office into a war room, where management and employees are no longer focusing on core business processes, but instead dedicating most of their time to putting out fires and managing internal crises.
And all this can have a negative impact on your bottom line, never mind your emotional and mental wellbeing!
Business issues
A complex topic to navigate in any family business is ownership and/or leadership. Because your company is likely owned and run by several family members, this can complicate decision-making and control, as you may not have a consensus about how the business should be run.
Unfortunately, this extends to how your business handles its money. If your staff are mainly family members, they’ll be emotionally invested in business decisions. This can mean greater motivation for business growth and success. But on the downside, you may have to deal with differing opinions on how business funds are managed, and specifically, how they should be spent and invested.
Similarly, you may struggle with a lack of clarity around roles and responsibilities. This is particularly true if the company has recently grown, or transitioned to a second generation, or if you have a mix of active and passive participants. Without clearly outlined roles and responsibilities, your staff can become confused or even frustrated about who does what. And that means that there’s a good chance of someone dropping the ball, which could ultimately cost your business.
No matter the guise that disputes come in, most conflicts in family business spring from deeper, root causes.
The Real Motivators of Conflict
The real causes of conflict in family business are usually a lack of internal governance and communication. Without effective systems in place, you run the risk of opening up the workplace for constant disputes.
Governance includes a number of important factors. One of them is a clear succession plan for your business. Beyond dictating how control of the business is handled between different generations, this plan also outlines how to keep your business running smoothly in the event of changes. Ideally, it should outline how decisions should be made, how investment decisions are made, as well as how any conflicts should be handled.
Of equal importance is communication. This is a key component of any successful relationship – whether that’s personal or professional. And since you have to deal with both at the same time, transparent and effective communication is essential to earn trust. This ensures cooperation and buy-in from the necessary stakeholders when it comes to making decisions or changes.
With clear governance in place, you can eliminate many of the common causes of conflicts in family businesses.
Proactive Ways to Avoid Conflict
When it comes to conflict resolution, prevention is definitely better than cure. It’s best to try to iron out any potential issues before they arise, instead of reacting to disputes that are already underway. And this means you need to be proactive.
This starts when you hire your staff. Depending on the dynamics of your family and company, you may not have every member on the payroll. If you do, you’ll need to put them in the seat they’re best qualified for. This should be based on skills and experience rather than their position in the family.
Additionally, you may need to make external hires if you don’t have the right person for a job. After all, you can’t sacrifice potential profits by keeping family employed in positions they’re not able to excel in.
From there, the best way to avoid disputes is through clear and regular communication. Family meetings are the key to efficient governance. They allow everyone to regularly check in and provide updates on successes, challenges, and opportunities. Plus, they allow for collaboration. Regular meetings will help you establish goals and visions, and ensure that your business operates to reach its shared mission.
If you’re not sure about how to start with establishing meetings or going about making changes for the better, it’s essential to hire an external advisor.
Business consultants or mentors can provide an objective perspective of where your business is. They can also help you draw up and follow a roadmap to ensure that you end up exactly where you want to be, without being sidetracked by conflict.
Strategies for Conflict Resolution
Unfortunately, it’s not always possible to pre-emptively eliminate disputes. But with a few strategies, you can minimize the potential impact on your business.
The first is to establish a formal conflict-resolution process. Remember that disputes aren’t unique to family businesses – all corporations deal with differences of opinion at some stage. What matters is handling them in a way that they do not escalate to affect your bottom line, or your relationships.
To begin with, you need a structured and standardized approach to handling any disputes. This includes:
- Identify the root cause. As mentioned above, there are often reasons for disputes that aren’t apparent at first sight. You need to address the cause of conflict, not just the symptoms of it.
- Communicate honestly. Clear and calm communication is key; talk about how the conflict is affecting the family and the business. It’s not about assigning blame; instead, it’s a way to talk through the issue.
- Brainstorm solutions. As a family, you can choose how to resolve the problem as smoothly as possible, and set up some ground rules for going forward, to ensure you don’t have any repeated issues.
You may also need to consider having a committee for conflict resolution. This should primarily comprise management, and it’s best to include external mediation from a neutral third party. Bringing in an expert can help ensure that disputes are reviewed objectively. At the same time, professionals can provide training and support to your staff to navigate potential issues and ultimately get conflicts resolved without them becoming personal.
Get help turning conflict into growth
The goal of conflict resolution in family business is not to have a winner and a loser. It’s to ensure that you are all on board with the common goal of having a successful business, combined with good family dynamics.
As such, it’s important to see disagreements as opportunities for innovation, rather than obstacles to progress. That way, you can ensure long-term harmony.
It all comes down to finding the approach that works best for your family and your business. And a business advisor can ensure that your chosen path to handling conflicts in a family business is the right one.
For business advisory services and mentorship, schedule a Discovery Call with one of team members today!
The information presented in this blog article is provided for informational purposes only. The information does not constitute legal, accounting, tax advice, or other professional services. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability of the information contained herein. Use the information at your own risk. We disclaim all liability for any actions taken or not taken based on the contents of this blog. The use or interpretation of this information is solely at your discretion. For full guidance, consult with qualified professionals in the relevant fields.
