Conflict Management in Family Business


It is a well-known fact that family businesses are fertile fields for conflict.
The reasons are not far to seek.

Various factors that could contribute to conflict: Change in culture brought in by success, sibling rivalries, preferential treatment to some Family Members, inter generational issues, spill over of domestic conflict into the workspace etc.

Every business has its rules, procedures, and hierarchies, which are formal and explicit. A Family also has rules but these are more informal, natural, and unspoken. Family Members find it hard to shift between these contrasting zones. Conflicts arise when equations at work reflect in familial relationships or vice versa. Both have adverse effects on the business model.

Differences could take many forms in family business: sibling vs. sibling, cousin vs. cousin, parent vs. child, Family Member vs. non-family member etc. and this may affect familial relationships. Even though it is perfectly normal to have such overlaps,
Family Members should be wary that they do not irrevocably damage the Business or the Family.

Two powerful psychologies are at play in Family Business conflict-Ego and rivalry. When a promoter or the founder treats the business as his own child and an extension of himself, every conflict or issue is met with irrational response in extreme cases.
This does not promote constructive resolution of the issue on hand.
The Family and Business system can become stronger with the right attitude and resolution techniques.
Conflict Resolution is easy to speak about but hard to execute. There is no single remedy for every business but, if the below mentioned key principles are followed, family businesses can certainly resolve their conflicts effectively.

  • Every Family Business must foster an environment where effective communication and feedback is encouraged and appreciated.
  • To address any weakness in family / business / ownership structure as it will give an opportunity to become stronger if addressed.
  • Ascertain the reasons for the differences in the underlying expectation of the Family Members and look out for solutions to bring it down.

If a third party intervention is required, do not consider a lawyer right away. Consider a facilitator. Take a chance at corrective action rather than severing ties.

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