Family-owned businesses have long been a critical part of and driving force behind our nation’s economy. In these challenging economic times, it is even more vital that family-owned businesses adopt strategies that can help avoid the risk that intra-family disputes pose to their current and future success.
In a family, all members are not always going to agree. That is how children become adults and become successful in the world– by learning how to diffuse and problem solve, as well as work well in a team environment. Even though all members of a family share a bond, this does not mean all individuals think and feel the same. It is likely there will be differing opinions on various business concerns and decisions made.
Disagreements Will Happen
Disagreements are hard to avoid when there is more than one person and opinion to consider. Disagreements are sometimes necessary in order for a business to change and adapt to find the best solutions to grow and succeed. This means that family business is a petri-dish for disagreements, and sometimes conflicts could even lead to the end of the business altogether. Though, it doesn’t always have to end that way.
Some of the specific family problems that arise in almost every family business include:
- The low communication levels among business partners.
- The family having differing purposes and goals for the business.
- General uncertainty or lack of future business direction.
- Different work ethics among the family members.
- Financial insecurity
With the right guidance, a family can resolve the business conflict that could be a getting in the way of running their business successfully. A mediator can help. Mediation is when a neutral third-party mediator assists the disputing parties in discussing their conflict, values, and source of the disagreement and then works together to find common ground and resolve it. The mediation process will help you navigate and breakdown your family business conflict in order to understand and find common ground with those involved in the conflict at hand.
Family Roles Can Be Confused In The Workplace
Family businesses are extensions of family relationships. Thus, the operations of the business and the family dynamic will very likely have significant overlap.
Unfortunately, this overlap does not always equate to an alignment in values, objectives, and judgment. This is often seen in circumstances where children of a successful business owner inherit the business interests and the children have differing views on how the business should be run and be operated. Sometimes, even with a clearly defined succession plan in place, the friction can create discord and litigation between the surviving family members.
Family business conflicts can also arise in the context of social or familial roles. For example, “dad” or “sister” may have that role within their family unit. However, in the business, other family members may be reporting to “dad” or “sister.” If all people do not properly engage in role separation, significant conflict can arise. It can sometimes be challenging to separate the roles because while our rational minds understand that the business goal is to maximize its economic return, the separation between family identity and workplace roles can be a struggle to navigate. People may have certain expectations of family members that may not be compatible with interests essential to the family’s business.
Bad for Business And Bad For Morale
Conflicts of interest — whether due to a family member feeling “entitled” to disobey company policies or to take more liberties with bonuses and salaries — can damage your company’s external image and credibility. If word gets out that your business is biased in its business connections and transactions, vendors and customers outside the family may be hesitant to deal with your company.
Family business conflict can also be bad from a family perspective. Not only do such dealings often end up costing the company and its shareholders money and lost opportunities, but they also may generate resentment from other family members in the business.
Conflicts of interest affect nonfamily employees, as well. They may become lose faith and motivation if they believe they are receiving inequitable treatment. As you can imagine, this can lead to decreased morale and productivity in the workplace.
Why Mediation Can Help Your Family Business Conflict
When a family business faces problems, there are added variables and dynamics you do not find in companies run by non-related partners. It is hard to leave work at home when work is home, and it is hard to leave family disputes at home when the family is at work with you.
Family business mediation is not simply an expense, it is an investment. Conflict within family business is inevitable and perhaps even healthy. From small misunderstandings to major disagreements, what separates the long lived family business from the casualties is not just their approach, but their response to resolving differences.
If you are dealing with a family business conflict and need the help of a skilled lawyer or mediator, call our office today.
