Families are prone to conflicts, and that’s no different when they run businesses together. But how should you deal with family conflicts to make sure that they don’t affect your business?
In a 2013 survey of Australia’s family businesses, nearly 600 companies were interviewed about various aspects of running a firm. Perhaps surprisingly, 40 percent of the respondents said that they had not experienced conflict in the business over the previous 12 months. It is likely that they had in fact experiences disagreements, creative tensions or minor disputes but that they dealt with them in a healthy manner that lead to resolutions and therefore didn’t consider them ‘conflicts’.
Of the 60 per cent who said that they had experienced conflicts, there were two primary causes: differing vision, goals and strategy and unequal competence of family members.
One respondent explained fears over what would happen to the business and his family if he sold. “We could sell out, but as the father of the CEO, I would feel guilty if I sell it from under him,” he said. “The siblings (non-executive board members) are not in agreement that this youngest member of the family is really suited for the CEO role. I fear that the siblings will fire him if I choose to step down and retire.”
This highlights a common worry that family business leaders live with, and the complexity of the roles that they must play in the interests of both the business and the family.
Many family businesses have come up with ways of dealing with such disputes and one of the most widely used mechanisms (according to a PWC survey) is to establish a shareholder agreement. Some also create policies to help family business leaders determine what’s best for the company’s and the family’s interests and whether that means employing particular family members or not – some will likely be deemed not suitable to run the business.
A KPMG family business study highlighted that for larger family businesses, decision making is one of the key sources of conflict. As firms grow, they tend to become more complex in structure and operations and as a result more family – and non-family – members are engaged in the decision making process.
One of the most important things to do, according to many experts, is make sure that there are clear lines of communication. You can’t discuss the business when you call round for lunch on a Sunday. Instead, you should schedule regular meetings to ensure that central players in the business are properly informed and have the opportunity to raise concerns or offer suggestions.
Many family businesses have come up with ways of dealing with such disputes and one of the most widely used mechanisms (according to a PWC survey) is to establish a shareholder agreement. Some also create policies to help family business leaders determine what’s best for the company’s and the family’s interests and whether that means employing particular family members or not – some will likely be deemed not suitable to run the business.
A KPMG family business study highlighted that for larger family businesses, decision making is one of the key sources of conflict. As firms grow, they tend to become more complex in structure and operations and as a result more family – and non-family – members are engaged in the decision making process.
One of the most important things to do, according to many experts, is make sure that there are clear lines of communication. You can’t discuss the business when you call round for lunch on a Sunday. Instead, you should schedule regular meetings to ensure that central players in the business are properly informed and have the opportunity to raise concerns or offer suggestions.
https://www.virgin.com/entrepreneur/how-deal-conflicts-family-business