While not all conflict is unhealthy, there are strategies family business owners can implement to help keep the peace.
Establish a conflict management forum
One of the common drivers behind conflict in family businesses is the lack of communication between the family, owners and management. Effective communication with family members is very important for family unity and is common practice among the world’s largest, most successful family businesses.
Recently, EY teamed with Kennesaw State University’s Cox Family Enterprise Center to survey the world’s largest family businesses. The report, Staying power: how do family businesses create lasting success? finds that 90% of participants have regular family or shareholder meetings to discuss business issues, 70% have regular family meetings to discuss family issues and 64% have a family council that meets regularly.
Holding regular family council meetings to deal with family issues and shareholders’ meetings to deal with ownership issues can provide a great way for owners to work through the dynamics of these potential sources of conflict. Through these meetings, the family can build and agree on a set of rules that address key ownership issues. The family council becomes a forum that allows family owners to be actively engaged in the debate surrounding ownership and family issues — the emphasis here being on the fact that all family members can participate, regardless of whether they are actively involved in the management of the business.
Keep generational differences in mind
Aligning the senior generation’s vision with the incoming generation’s vision is crucial to the success of any family business. Conflict can occur on many fronts. The senior generation may have views about money, authority and other factors that differ from their children’s views. The challenge in every family business is to articulate those differences and be honest about them in order to manage potential conflict effectively.
It’s important to be clear on precisely who does what in the business and make sure their roles match their skills. If the roles change, consider the implications for both the business and the family. The next generation should be involved and encouraged to learn about the business and its operations as early as possible in order to provide them with the necessary experience and to instil a sense of commitment to the family business.
Be clear with succession intentions
Don’t underestimate the impact family dynamics can have on succession planning. More than 87% of the businesses we surveyed have clearly identified who’s responsible for succession, whether it’s a traditional transition or an unexpected change in leadership. Across all regions and countries, the board of directors/advisory board is most often responsible for succession (44%), with the next tier of responsibility shared about equally between owners/family council and the CEO.
Training, educating and mentoring the next generation is critical to reducing conflict when dealing with succession. Providing a clear and transparent plan for the future is necessary so that all members of the family are aware of the role they’ll play in the future of the business — whether that’s inside or outside the business.
Families that do business together grow together and in the process can achieve a solid relationship that can weather any storm. Family businesses come with a deeper, more complex network of relationships. Managing conflict is key not only for the survival of the business — but for the survival of the family itself.
[ David Steinberg and Colleen McMorrow - Forbes]
