As family business advisors, our team often is called on when a family business is experiencing disruption, challenge, or conflict.
Over the years, we’ve learned that family members often have a tough time seeing what’s pretty clear to us as outsiders: challenges like low levels of trust, misalignment of goals, or blurred lines between business and family relationships.
Conflicts within a family business are never just about business. They usually involve personal relationships and emotions, making them more complex to deal with.
These kinds of challenges can easily lead to shareholder and leadership dysfunction, putting a family business in real danger.
But we’ve also found that if you stay vigilant in guarding against this kind of dysfunction – and instead, seek to work through conflict in a healthy way – your choices can benefit your family business for generations to come.
Here’s how you do it.
Root Causes of Conflict in Family Businesses
Most family business conflict seems to stem from similar root causes: lack of clear communication, no alignment on a central theme or goals, differences in vision for the family and the business, and –as a result – different expectations around business performance.
When these differences aren’t addressed, moving forward can become nearly impossible.
To manage these challenges, you need to take a step back and look for where the disconnect is coming from.
Best Practices for Managing Conflict in Your Family Business
Below we’ve outlined five healthy ways to manage conflict within your family business.
- Face issues head-on
- Settle on a common vision
- Insist on sound governance
- Prioritize communication and transparency
- Seek external help when you need it
Let’s take a closer look at how each one of these strategies can help your business.
1. Face Issues Head-on
We know that facing conflict is hard.
Most people tend to avoid conflict because it feels uncomfortable, but the sooner you take action when you recognize conflict, the more likely you are to solve it before it becomes a danger to your business or your relationships.
If, for example, you know your family and business leaders are misaligned on vision and expectations for the business, it’s essential to pull the group together and discuss.
As a practical first step, it’s important for family members to come together and make the key decision about the nature of their business. Are you a “family-first business” or a “business-first family”?
Clarity on this front will inform many of your other choices moving forward.
2. Settle on a Common Vision
Once you’ve reached clarity on who you are as a business and as a family, it’s time to move forward with other practical discussions.
For example:
- What is your long-term vision for your family business – definition of future success?
- What is your business’ overall purpose – or its “why”?
- What do you, collectively as a group of shareholders, want to strategically achieve over the next five years?
It’s good practice to convene in-person, when possible, to work out these plans.
Doing so allows you to gain clear alignment – and that alignment then breeds trust. Not only among family members, but also with other business leaders and your employees.
3. Insist on Sound Governance
The hard-won trust and alignment you’ve developed can erode over time – unless you put strong governance processes in place to protect them.
This could include bringing in an external advisory board to offer counsel and increase accountability among family members and leadership.
Such an advisory board can offer external perspective and increase accountability, making sure that both management and family stakeholders are held to the same standards.
Sound governance can also mean developing a regular schedule for family meetings and clearly defining family members’ roles and responsibilities.
At Ferguson Alliance, we help our clients develop a family constitution. A family constitution serves as a living document that outlines your family’s values, vision, mission, and policies for managing the business.
It can also include conflict resolution processes, decision-making protocols, and succession planning.
4. Prioritize Communication and Transparency
We’ve found that over the long term, transparent and candid dialogue is the backbone of any successful family business.
By creating an environment where family members feel comfortable expressing their opinions and concerns, you can prevent misunderstandings and resentment from building up over time.
It’s also important to be clear and forthcoming about business operations, financials, and future plans.
This kind of transparency builds trust and reduces the likelihood of conflict.
5. Seek External Help When You Need It
Sometimes it’s helpful to get an outsider’s perspective when managing through conflict.
A trusted family business consultant can provide an unbiased perspective and lead discussions to help resolve conflicts.
They can also offer valuable insights and strategies for improving governance and communication within your family business.
Managing conflict in a family business is no easy task, but with the right approach, it’s possible to overcome these challenges and build stronger relationships, and a more cohesive team in the process.
Remember – the goal isn’t just to resolve conflicts but also to create a foundation for future growth and harmony.
If you’d like some help working through conflict in a healthy way, reach out to set up a consultation with one of our trusted family advisors. We’d love to help.