Conflicts In Family-Owned Businesses: How To Handle Them
Conflicts happen in all kinds of businesses. Unfortunately, those conflicts become much trickier when it occurs between family members operating the business together. The types of conflict in a family business can also vary, as the causes overlap between family and business issues simultaneously.
Family business conflict resolution involves several approaches to resolve current conflicts and prevent future ones. That can begin with establishing clearly-defined roles for all involved family members. Improving communication, negotiation, and objectivity can also help address issues and achieve win-win outcomes for everyone. Lastly, it helps to include all family members in the decision-making process.
As you read this guide, you’ll first discover the many causes of conflicts in family-owned businesses. Then, you’ll find some of the most useful solutions for resolving current disputes and preventing future ones.
Let’s get started!
What Causes Conflicts In A Family-Owned Business?
The types of conflict in a family business can vary significantly. That’s because those conflicts have several causes, and more than one can happen simultaneously.
Here are the common causes of friction and conflict in a family-owned business:
Poor planning: No matter how well a family gets along while running their business, friction can happen due to a lack of clear planning. A typical example is a lack of succession planning, i.e. planning for who takes over if the family leader dies. That can result in conflict between competing family members who want to take the lead.
Communication breakdowns: Many families also experience conflict due to a lack of clear communication, also known as communication breakdowns. As a result, misunderstandings and unnecessary arguments can occur, putting the business at risk.
Conflict avoidance: Conflicts can be healthy if they’re handled correctly. Unfortunately, people often make the mistake of avoiding conflicts entirely and leaving issues unresolved. That’s bad news for families and their businesses, as unresolved conflicts can cause resentment and other negative feelings to grow.
Family rivalries: While business issues can spill over and affect family life, the opposite can happen. Rivalries that already exist between family members can also spill over into the business, affecting its daily operations. For example, sibling rivalries are common, but the same happens between parents and children or with extended family members.
Unclear responsibilities: The responsibilities in a family business are meant to be shared among family members. A lack of clear boundaries can lead to friction and conflict. For instance, some family members might find themselves carrying too many responsibilities while others have too few. That can lead to resentment.
As you can see, conflicts in family-run businesses can come from several different sources. On top of that, they can also come from more than one source at a time, compounding their harmful effects on the business.
For that reason, family-owned businesses must be aware of these challenges and equip themselves to handle them as best as possible.
How To Resolve Conflicts In Family Businesses
The main thing you must understand about family business conflict resolution is that it requires a lot of patience and mutual understanding.
Remember: these conflicts are uniquely challenging because they overlap between your business and family lives simultaneously.
Here are 5 helpful tools you can use to handle conflicts in a family-owned business better:
1. Well-Defined Roles
The first way to resolve conflicts and prevent them in the future is to establish well-defined roles for family members involved with the business. That way, each person can focus on handling their responsibilities to the best of their abilities.
For example, just one family member can handle procurement tasks easily. They can use Dropee as a single marketplace to reach many wholesalers and find the best prices. Better yet, they can place orders immediately and enjoy interest-free, 60-day payment terms with Dropee Credit.
As a result, the person in charge of procurement can handle their responsibilities efficiently, reducing any stress or conflict surrounding those tasks.
2. Clear And Deliberate Communication
As you’ve read earlier, a lack of clear communication causes a lot of the conflicts that occur in family-owned businesses. So, the best way to counter that is by being more deliberate and transparent with how family members communicate.
Clear communication begins with an agreement that all family members can raise concerns without fear of judgment. Those concerns should then be discussed openly, with everyone providing their input.
Besides that, regular discussions or meetings also give the family a chance to ‘check in’ with each other and address issues before they become more significant with time.
3. Improved Negotiation
Negotiation isn’t just something done with clients or suppliers outside the business. Instead, it’s also a critical function that must occur within the family unit that operates the business.
Negotiation is vital because some issues can only be resolved through compromise. So, when family members can negotiate better with each other, everyone will leave the table feeling satisfied with the outcome.
In simpler terms, better negotiations ensure that all family members enjoy a win-win situation when resolving issues.
4. Better Inclusion
Unfortunately, a lot of friction in family-owned businesses results from a lack of inclusion.
For example, only one or two family members will ‘call the shots’ and make decisions that affect the rest of the family. That can quickly cause problems as the affected people don’t have any input into that decision-making process.
Thankfully, that problem can be solved quickly, allowing all affected family members to have their say. Giving them a chance to provide their opinions and recommendations will go a long way towards gaining their support for the final decision.
5. Objectivity
Last but certainly not least, the way to resolve current conflicts in a family-owned business and prevent future ones is to handle them objectively. That can be challenging, as it means overcoming any biases you might have towards the different family members working for the same business.
However, when done correctly, being objective will build mutual trust and respect, improving the business in the long run.
Final Thoughts
Overall, it’s essential to understand that family business conflict is not something to take lightly. That’s because it can affect how smoothly the business runs. It also makes things more challenging that there are many types of conflict in a family business.
On the positive side, family business conflict resolution is possible with the correct approaches. For instance, having clearly defined roles, improving communication and negotiating, and maintaining objectivity can resolve and prevent conflicts in family-owned businesses.
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