Like any other organisation, family businesses are not exempt from conflict. And since disputes are inevitable, the smart thing to do is to embrace them as an opportunity for change, organisational strengthening and growth.
4 possible causes of conflict in a family business
In the family business, emotional and business factors are intertwined. As a result, these are four of the most commonly encountered conflicts.
1. There is no common goal
When each member of the entrepreneurial family has his or her own personal goal, it is easy for them to rebel against any decision that does not help them achieve their objective. For this reason, it is essential to define a vision and a business culture agreed with all members of the family so that personal needs take second place.
2. Lack of a good definition of roles
In family businesses there is an overlap between two organisms of which the same people form part: the family, which is based on emotional ties; and the company, which is based on hierarchical roles. To avoid conflicts that can easily spill over to the family level, it is essential that there is a clear definition of roles and responsibilities in the company and that appointments based more on family relationships than on professional competence are avoided. The creation of a family protocol is a way to ensure that all family members are aware of the company’s operating rules.
3. The always complicated succession
The transition from one generation to the next at the top of the family business is one of the most delicate moments for this type of company. To avoid struggles for control of the company, it is advisable to plan the succession process in advance. However, sometimes this preparation is delayed because the next generations are not interested in taking an active role in the company or because the founder himself does not want to lose his status. Nor should we fail to foresee the possibility of a forced succession due to a sudden and unexpected event, such as the sudden disability or the unforeseen death of the entrepreneur. In these situations, having a roadmap that stipulates the steps to be taken can make the difference between the survival or death of the family business.
4. Communication problems
Smooth communication is essential for good understanding and good governance of the company. Family councils should serve as forums for discussion to mediate and resolve disagreements. However, lack of communication between members of the business family is another common source of conflict. Verbal communication is often abused to the detriment of written communication and there are difficulties in maintaining frank and open dialogues. It is advisable to encourage training in effective communication, negotiation and conflict resolution skills to help separate the personal from the professional.
How to anticipate the emergence of conflict
If not dealt with in time and in an efficient and orderly manner, conflicts can fester and become chronic, even leading to the end of the family business. But it is even better to prevent their occurrence with the necessary legal instruments.
Using a consultancy firm specialising in family businesses such as Confianz can be useful for dealing with the process of creating the family protocol, family pacts, succession pacts, etc. Also, in the case of more complex conflicts, to mediate and reach consensus solutions avoiding misunderstandings or even sanctions due to ignorance of legal regulations.