Blending family dynamics with business operations can be challenging. Conflicts are common and can stem from various sources. Understanding these conflicts and how to resolve them is crucial for business success and longevity.
“If you love your family, it doesn’t matter the returns; you’ll want to stay with them,” Joe Astrachan, a global leader and researcher in family business, recently shared at the Center for Family Business at Case Western Reserve University’s Weatherhead School of Management. “And if you can’t stand the family, it doesn’t matter how much money is being made; you’ll want to leave, and that often causes irreconcilable conflict.”
Sources of conflict
Differences in vision and goals. The older generation might have a more conservative approach, focusing on preserving the business, while the younger generation might be more inclined to innovate and expand. It can lead to disagreements on the direction of the business.
Role ambiguity. It’s cited as the No. 1 reason for conflict in family businesses. Without clear definitions of roles and responsibilities, family members may find themselves competing for authority and control, often resulting in power struggles that disrupt the operation. Roles are also blurred because family members wear multiple hats of family member, employee and shareholder, often with competing expectations.
Emotional involvement and personal issues. Family relationships can bring emotional baggage into the workplace, leading to biased decision-making and unresolved personal and/or family issues spilling over into business operations.
Succession planning challenges. Deciding who will take over the business can lead to conflicts, especially when multiple family members vie for leadership positions. The absence of a clear and transparent succession plan can create uncertainty and discord.
Ways to reduce or
resolve conflict
Establish clear roles and responsibilities. Among the most effective ways to reduce conflict is to establish clear roles and responsibilities for the various stakeholders. And stakeholder roles will evolve as the enterprise, family and individuals evolve. Clearly defined roles help set expectations and boundaries, ensuring that everyone knows their duties and respects each other’s authority. Established processes to discuss roles and responsibilities can help maintain clarity and address any issues promptly.
Develop a unified vision and values. Creating a unified vision and supporting values can help align the goals of all family members. This involves open and honest communication that both reflects on the family’s history and lays out a vision for the family’s legacy. Defining and documenting vision and values reduces misunderstandings as family members understand priorities and can work toward common objectives.
Implement conflict-resolution mechanisms. Establishing formal conflict-resolution mechanisms is essential to addressing and resolving disputes. This can include setting up regular family meetings, appointing a neutral third-party mediator or developing a family council to handle conflicts. Having structured methods for key stakeholders — family, enterprise, shareholders — to resolve disputes can help prevent conflicts from escalating and provide a framework for constructive dialogue.
Conflict in family businesses is inevitable. But by understanding the sources of conflict and implementing strategies to address them, family businesses can thrive and achieve long-term success.
Laura Bonnet is Director, Center for Family Business at Case Western Reserve University’s Weatherhead School of Management
