It goes without saying that in any setting where humans interact with each other, there is always the possibility for conflict. Healthy disagreements between two or more parties is normal, but conflict which can have disruptive outcomes in a relationship, like an adult child having to leave home because he/she cannot get along with their parents is a heartbreak that should try to be averted.
It’s no different in family–owned businesses, where conflict can rear its ugly head among business owners and their children, siblings and, the children of siblings, and any other family member, such as in–laws, who may be involved in the business.
The Inevitability of Conflict
One of the main causes of conflict in family–owned businesses stems from the blurring of lines between family and business responsibilities. Often, business owners and family members are caught between a rock and a hard place when trying to separate family loyalties from business responsibilities.
The fact that family members know and interact with each other outside the business environment adds to the complexity of separating family and business matters. As well, in some cases, family members take their differences to work, creating even more fertile conditions for conflict.
When business decisions involve family members
Conflicts often arise when owners and managers have to make business decisions that involve family members.
Take the case of Brad and Stefan, two recent university graduates, both children of siblings working in the family’s manufacturing business. Brad, an Economics graduate, is the son of the elder brother, Charles, who is a production manager; while Stefan, a Business graduate, is the son of Chris, a line supervisor.
Being a manager and the elder brother, Charles believed that Brad was entitled to a vacant management trainee position. But Peter, the father and business owner, thought that Stefan was a better fit for the position and made the decision to hire him. He offered Brad a job as an analyst.
Charles was angry at his father’s decision and gave Chris the cold shoulder at work, creating two sources of conflict – son versus father and brother versus brother. This conflict spilled over into the families of the two brothers, further aggravating the situation. At the same time, Brad and Stefan were innocently dragged into conflict as rivals.
This simplistic experience can be transferred to a myriad of more complex situations with similar characteristics. In some cases, family tradition would have dictated that the son of the elder brother gets the first crack at the job of his choice. But Peter evidently hired Stefan based on him being better suited for the position.
Peter’s decision highlights an important weakness in family businesses which rely on tradition and nepotism in the decision–making process. Such businesses frequently end up without the right skill sets to operate effectively.
When owners want to be in control
As entrepreneurs or business owners, parents like to maintain control. They tend to see their children as natural extensions of themselves and expect them to run the business in the same manner as they do.
Although children might hold managerial positions, there is often a tendency for owners to want to oversee or question their decisions. The children, in turn, are uncomfortable being closely supervised. They feel that they are being handcuffed by their parents’ controlling behavior.
As a result, they end up resisting control and questioning the actions of their parents — leading to one of the biggest sources of owner–children conflict in family businesses. Such conflict is often disruptive to the operations of the business and can sometimes lead to the parting of ways between children and parents.
The case of John, a business development manager in the pension consulting business run by his 72 year old father, Edward, illustrates how father–son conflict can lead to extreme action. John, aged 32, was a savvy manager who spent a considerable amount of time socializing with prospective clients to earn their trust and win their business. And he was quite successful in his efforts. However, his father, Edward, thought John’s business development strategy was too aggressive and costly and preferred that he used a more formal “boardroom style approach” to woo potential clients.
John and his father constantly argued about his style, with John suggesting that his annual sales were well above those of his predecessor, who was a non–family member, providing proof that he was good at what he was doing. Yet, his father, “an archaic old man”, as John puts it, was set in his ways and insisted that John change his approach. Following a series of arguments, John’s father fired him. He ended up joining a competitor.
In this case, regrettably, Edward lost his son’s loyalty simply because he was not willing to take a different approach to growing the family business. He never gave John a fair chance to flourish. Such deep conflict generally creates lasting rivalry.
In other instances, some parents do not necessarily want to give up control to their children, even though they might say they would like to. This is especially true if business owners are in the process of planning their succession or retiring. They often fear losing the social status and power associated with being a business–owner and resist allowing their children to take charge. Children, in turn, become frustrated with not being given a chance to prove their worth to the business and are at constant loggerheads with their parents.
When siblings become rivals
Sibling rivalry can be as intense as parent–children rivalry. Older siblings, who may have been working longer in the business, might see their younger siblings as underlings. Consequently, they unwittingly assume a parent–like role over their younger siblings.
In addition, elder siblings often see themselves as successors of their parents and, therefore, feel empowered to subject their younger siblings to the same degree of control that their parents might have exerted over them. As a result, younger siblings have to constantly prove their value in order to earn respect – and may, in fact, never be able to do so.
Sibling rivalry is also linked to the childhood quest for their parents’ attention — a reality that also plays out in the business, with siblings striving to outdo each other. Parents, on the other hand, may also intensify sibling rivalry by having “favorites” or by pitting children against children. As each sibling attempts to gain the approval of their parents, rivalry intensifies, accentuating conflict.
Avoiding the impasse
Clearly, there are many different sources of conflict in family businesses. Some are preventable; others are not.
Regardless, it is the responsibility of business–owners to implement strategies and processes to prevent and resolve conflict as quickly as possible. If not addressed, conflict can be very disruptive, not only to the family business, but also to family harmony overall.
Here are some strategies to help avoid and resolve conflict.
Use formal governance structures
We recommend that you establish formal governance structures, such as family forums, councils or meetings to provide family members with a channel through which they can air their grievances and concerns. When people don’t have an avenue to be heard, even seemingly unimportant issues can fester and flare up into major conflict.
Clearly define the rules of engagement to ensure that family members stick to only the pertinent issues they wish discuss at these meetings. Otherwise, they could get hung up on irrelevant matters and fail to resolve the critical ones at hand.
Business owners, or whomever heads each family forum or meeting, should be capable and authorized to deal constructively with all issues. Their job is to gain buy–in on any decisions made among all family members, to avoid ongoing conflict.
Maintain open communications
Open communication is critical for conflict avoidance, as well as conflict resolution. For instance, conflict can be avoided by keeping family members aware of any developments or changes in the business. Don’t let them find out from a second–hand source — especially about any change that might have an impact on them personally or professionally. Nor can you include some family members in your communication initiatives and exclude others.
You can avoid potential conflict by clearly communicating the reason for your actions to all affected parties in advance. For instance, if you plan to promote one sibling, you should ensure that other siblings, who might believe that they also deserve to be promoted, are aware of your reasons for doing so.
Through open communication, you should also be able to spot potential sources of conflict and address them before they blow up into major disruptions to the business and family relationships.
Use education as conflict resolution tool
To maintain harmony, an open mind and a willingness to resolve conflict are essential. I further recommend that you and your frontline managers obtain appropriate training in conflict resolution. The specialized skills you will develop will always serve you well should conflict arise in your business or, indeed, in your life.
Seek outside help, if necessary
In some instances, you may feel that conflicts appear insurmountable or that resolution is beyond your capabilities, due to the emotionally–charged environment which makes meaningful dialogue challenging. In those instances, I encourage you to engage an outside mediator who can bring objectivity to the table to help resolve any impasse.
At the end of the day, conflicts in family businesses can be extremely disruptive and hurt the enterprise’s bottom line. Your role, therefore, is to take all necessary steps to, first, avoid conflict before it arises, or secondarily, to resolve disagreements before they escalate into something destructive.
This story is for illustrative purposes only, based on our professional experience, and does not necessarily reflect the situation of any individual or family.