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Chapter 3:
Preventing conflict in family business.
Every family business has two stories: the story of the business, and the story of the relationships between those who hold it together.
When everything is going well, those stories blend together seamlessly. When it’s not, the tension can reach heights not often experienced by people in non-family business contexts.
Disagreements over money, control, or succession may be complicated by years of history and expectation. Unspoken loyalties and resentments play a part, even if no one realises they feel that way. Sometimes emotion doesn’t even present as constant arguing, but indecision or avoidance.
As a source of pride and legacy, the family business naturally influences how people relate to one another and the way conflict arises. It’s how family business patriarchs and matriarchs handle these situations that sets the tone for what happens next.
When love, loyalty and money mix.
In most families, roles start forming long before anyone steps into a business.
The eldest may be seen as a natural leader, the youngest a risk taker, one sibling as dependable, and another a creative spirit. These traits affect how each person perceives themselves and is perceived. Coupled with underlying family dynamics and the stressors of running a business, it’s no surprise that tensions can flare. For example, the child closest to the founder may be the planned successor even though everyone knows they’re not the best fit. Other siblings feel pushed out, and the moments of exclusion feed subconscious resentment.
Inheritance issues add even more weight, because money is rarely just about numbers.
It’s a symbol of recognition and even love. For a child who feels short-changed in any way – be it their inheritance or the role they’re given in the family business – the fall-out could be enough to fracture family relationships indefinitely. Emotion and expectation aren’t easy to manage, and certainly add to the stress of the business founder who usually only wants to see their dream realised.
Here are six signs that it may be happening in your family business. oose component
People stop making decisions.
Where once people might have spoken openly and come to decisions quickly, you can now see avoidance and matters going unresolved.
One person makes all the decisions.
If there are multiple family members and some have uncharacteristically taken a backseat, this can frustrate both the one making the decisions and those who have gone quiet (perhaps because they’re tired of not feeling heard).
You can feel the tension.
Even without words being spoken, you can sense bitterness, anger or total disengagement and it’s unsettling.
Open conversations become shallow.
Instead of addressing issues directly, family members stay quiet in open meetings and express their concerns to allies behind closed doors.
Everyone is making assumptions.
Free-flowing conversations appear to have stopped, and people are making up their own stories about who is right or wrong and why.
Performance is suffering.
Conflict has started to affect individual and business performance, while family members outside the business might be getting involved to act as mediators.
Every one of these signs is easy to dismiss.
But all are worth noticing and addressing. Left to fester, they can easily lead to explosive arguments with sentiments shared and damage caused that isn’t always easy to come back from.
The conversations no one wants to have
Some of the most important conversations in a family
business are the ones people put off. They feel too personal, risky, or difficult to raise without upsetting someone.
However, these are the conversations you need to have. Find the courage to have them now, so everyone can say their piece before things get worse or life events happen and it’s no longer an option.
“What happens when mum or dad step back?”
Any ambiguity around succession planning is not wise. Children might be
hesitant to spark the conversation because they don’t want to appear greedy or selfish, while mum and dad avoid it because they’re not ready to think about it or haven’t made any firm decisions. The longer this question goes unanswered, the less chance you have of enacting an effective succession plan. For more on succession planning, please refer to Part 4.
“Is everyone pulling their weight?”
Don’t be afraid to take a true reading of how family members are performing in the business, so you can address any shortfalls decisively. One sibling who shows up every day while the other constantly takes more than they give is a recipe for failure.
“What do we actually want from this business?”
Not all family members share the same vision. Some see the business as a legacy to protect, others as a vehicle for innovation, others as a way to grow wealth. Without being on the same page, strategic decisions in both the short and long term will suffer.
“Do we want to work together at all?” Some people stay involved in a family business out of obligation rather than choice. Talking about whether everyone actually wants to be part of the business is empowering and necessary.
Finding a clear path through tough moments
Although it may not feel like it, conflict in a family business is often a sign that people care.
They care about the business, the legacy, and each other.
If you can find a way to handle this conflict in a calm, constructive and diplomatic way, you set an example for how
it should be resolved in the future.
Here are three strategies to help you do this:
Never forget you are running a business. Just because someone is a parent or child or sibling, it should not have an excessive bearing on their business role and responsibilities.
Make your expectations clear, be prepared to follow through, and try to keep business conversations anchored in commercial reality.
Set meetings with an intention to air grievances and let everyone have their say. These meetings may get emotional, and that’s OK. Ignoring emotion won’t make it go away.
Acknowledging how people are feeling, and allowing them to voice their ideas and concerns, is the fastest way to unpack the sentiment that’s bubbling under the surface.
A trusted adviser is an invaluable resource for family businesses. Especially when your adviser has been along for the journey for some time, they can easily plug into the challenges unfolding and know why. They’ll also understand how best to engage with each personality in the family.
The impartiality removes much of the pressure from the founders, or family members who are more commercially minded. The adviser’s goal is always to keep steering the business in the direction that the family has agreed on.
It’s what you do with conflict that matters
Every family business faces tension at some point – it’s a natural part of working closely with loved ones. So if you can’t avoid conflict, learn to make the best out of it.
Use it to understand each other better.
Leverage the diversity to make the business stronger.
And when it all feels too difficult, bring in external advisers for reinforcement.
Because remember, your real legacy isn’t only your business.
It’s the relationships that make it what it is today, and what it becomes in the future.
Questions to ask before conflict arises
- What are each person’s expectations around
ownership and roles? - How do we define fairness when it comes to shares,
inheritance or rewards? - What’s the process for raising concerns or
disagreements - How can we create safe spaces for honest
conversations? - Who can help us mediate or guide difficult
discussions? - What are our shared goals for the business and
family? - How will we review and update plans as the business
evolves?
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