Personal Finance

How to resolve conflict in family businesses


For the last few years Kenya has experienced family business rivalry between siblings which has put the enterprises on their death bed.

The potential for conflict in such businesses can be greater than for others typically due to a clash between commercial and emotional concerns.

Conflicts can occur in even the closest-knit families and adding a business to the mix increases the chances of it escalating to full fight. Although family business conflict is interesting to outsiders, it can tear families apart.

Family businesses provide fertile ground for conflict, and add unique dimensions to already complex family systems.

When conflict arises in a family business, it’s often impossible to separate the family ties from the business relationships. What’s more, family conflict that’s not properly managed can harm the economy.

If you are part of a business with family members, it’s crucial to be able to address and overcome inevitable conflicts. That doesn’t mean you have to achieve unending, perfect harmony among those involved.

Instead, the aim is to effectively manage the disputes so that there is no serious adverse impact on either family relationships or the operations of the business.

When prevention hasn’t worked and a conflict is developing, the sooner it’s managed the easier it is to resolve. Let’s walk together on how to solve the differences:

Communicate early and often about issues: This is highly effective in avoiding and minimising conflicts. Most significant conflicts start with misunderstanding over smaller issues and differing view points.

Being able to openly talk about them and find areas of commonality can stop them from becoming more problematic. Low-conflict families reach out to each other much more frequently than high-conflict families.

Communication serves to build trust, reduce misunderstandings and strengthen relationships in general. Families who keep in touch can discuss disagreements as soon as they arise so bad feelings don’t fester.

Creating a system for addressing conflict can help families manage a range of issues, including simple personality clashes as well as disagreements over business strategy, expansion, financing, acquisitions or corporate governance.

The process serves as a kind of early warning system that alerts company executives, family and non-family alike, to brewing problems.

A formal resolution process should outline responsibilities for detection and identify what steps should be taken. Families must create personalised systems that are based on their values, meet their unique needs and have widespread support among stakeholders.

Family constitution: Plan how you'll deal with conflict and disagreements and set this out in the family business constitution.

Holding a meeting of the business' management may be appropriate for addressing relatively minor disputes.

Bring in experts to mediate major conflicts: some issues simply cannot be resolved internally. When family members become entrenched and constructive dialogue isn’t possible, an objective expert who is trained to help resolve conflict can help cut through the emotions and focus on issues.

A mediator can also help guide a family through initial conversations all the way to a final resolution, many family businesses can achieve more in a few hours with an outside expert than they have in years by themselves.

Plan ahead for conflict: There are ways to plan for conflicts before they erupt. The best way is through a formal resolution process that can bring some order to the ebb and flow of emotions that are inevitable in a business-owning family.

Just as businesses have contingency plans to address various threats, family companies should also have a plan in place for managing family disputes before disagreements escalate and tensions rise.

Don’t let business bleed into family time: It’s very challenging to keep from bringing business home, but one way that conflicts turn into family drama is by failing to keep them separate. Family business leaders must set the example by separating business and family time as much as possible.

One way to make this separation possible is by having formal spaces and structured times to discuss business issues. Explicitly making other times no-business zones can help family members relax into their personal roles and get away from work.

Family disputes

Many conflicts boil down to age-old family disputes. It’s common to see businesses that mirror family hierarchies. For example, parents might run the company together or a favored eldest child might serve in an executive role while other children and spouses fill in other management positions.

However, these parent-child and family dynamics can make the separation of family and business even more difficult. Leaders must be able to treat children like employees and managers during business time to help reduce the risk that family dynamics will damage the business culture.

If you are part of a family business, you will almost certainly have fights and squabbles with members of your family from time to time. The key is to take steps to address those problems in ways that prevent disagreements from blowing up into full-fledged warfare that can potentially take down the business.