January 31, 2018 by Peter Hobb

How to avoid conflict in a family business

The last thing you want to do is ignore existing or potential conflict, which could create worse outcomes in the long run – for both the business and your family. When family conflict is allowed to escalate, non-family member employees could begin to question your leadership, experience lower morale and even leave the business. In order to avoid these outcomes, consider the problems that cause conflicts within family-owned businesses and responses to help you overcome them.

Lack of communication

A common source of conflict in a family business is miscommunication. Communication among all key stakeholders is critical to minimize conflict. Challenges often occur when the expectations of family members do not align with the reality of the business. If problems or conflicts do arise, they should be discussed openly and resolved as efficiently as possible. It is important for all family members to feel heard. Regularly communicate key business updates and schedule meetings that allow all employees (including family members) to share concerns and express ideas.

It is important the family has a clear, unified vision for the future of the business. When you were starting out and the business was much smaller, the only vision for the business that mattered was your own. However, as the business grows and your family becomes more involved, it is important they understand your vision and buy into it. Without a coordinated vision, it is difficult to align business activities, resolve disagreements and make employees feel invested in the success of the business.

If you are working toward an aligned vision, do not keep secrets or share business news with family employees first. It is essential to communicate honestly and openly with all employees, particularly when trying to retain trust and morale. As trust grows, the quality of your decision-making will improve.

Unclear roles and responsibilities

When a family member’s role within the company is unclear or a bad fit, it can be an impediment to family relations and the growth of the company. If family employees are not utilized in a manner that provides a benefit to the company, the individual can become “dead weight,” negatively impacting the business’s growth.

In some cases, a family member may feel entitled to an important position within the business and enter unprepared. If a family member is not able to fulfill their role or make a contribution to the business, they should not be included on the company payroll. Favouritism towards family members – whether real or perceived – can lead to conflict within the family unit and among non-family employees. Some businesses require family members to get relevant external experience before entering the business, ensuring they have developed the expertise required for their position.

Alternatively, a family member can feel they have not been given a meaningful position within the business. This may prevent them from feeling empowered to make contributions to the growth of the business. It is important the family member’s role aligns with their skills, clear expectations of how they can contribute to the company’s growth are defined and mentorship is available, allowing them to grow their role within the organization. 

It is also important to make clear distinctions of roles and hierarchies, so all employees feel like they are helping run the business. Family employees should not be permitted to abuse their position in the family for perks, and non-family employees should be given equal access to growth in the company. Finally, be sure to create a clear organizational structure and hierarchy, so non-family employees are able to navigate through the company and clearly understand who they report to.

Blending of family time and business

In many family businesses, there is no clear distinction between the family’s personal time and the business. Family relationships within the business are quite different than they are in a family setting. Consistently letting the business take over family gatherings can lead to a breakdown in family relationships and create complicated dynamics, negatively impacting the relationships of those who work together or frustrating family members who are not part of the business (and, therefore, unable to participate in the discussions).

You should always make an effort to maintain a family dynamic that is external to the business. Keeping business out of family gatherings can also help ensure personal conflict does not spill into the business and negatively impact operations. If you need to discuss business matters during family events, create a balance by distinguishing set times or rules (i.e. only emailing or calling during certain time periods).

No succession plan

Serious conflict can arise in a family business without a clear succession plan. If you want to keep the business within the family and ensure it is passed to the next generation, you need to plan ahead. Ensure it is clear who will take over the key leadership role(s), and provide those family members with mentorship to ensure they are ready when it is time. An outside expert can help develop a long-term strategic direction, plan for a seamless transition of leadership and maintain a healthy family dynamic.

Concluding remarks

Running a business with family employees requires transparency and clear communication. You don’t want to lose key employees or hurt company morale with family-related conflicts. If and when conflicts do arise, deal with them by focusing on the business objectives, not emotions. When family conflict escalates and begins to negatively impact the business or family relationships, seek an outside mediator to work towards an effective resolution. 

Meet the Author

Peter Hobb Peter Hobb
Courtice, Ontario
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