How to Deal with Conflict in Family Business

February 6, 2014 | Roger and Susie Engelau

In last week’s post, I outlined 8 “false assumptions” about family-owned businesses. This week—conflict in family business.

If you’re in business, conflict is inevitable. If not managed well, it can ruin a business. And if it’s a family business, it’s a fact that conflict is even more difficult to manage.

Family businesses come with a deeper, more complex ecosystem of relationships that raises the stakes in conflict situations. Family members depend on one another financially and the business is linked to the quality of the family’s relationships. Family and business are distinct organizations, each with its own culture and dynamics.  So, yes, family business is tougher to manage.

Still, family businesses can be strengthened by conflict if you manage it effectively.

You’ve heard of IQ and EQ (Daniel Goleman’s Emotional Intelligence).  Edwin A. and Colette Lombard Hoover have coined the term RQ, Relationship Intelligence, in their book Getting Along in Family Business.  They provide tools to assess your family members’ RQ—tools I’ve used successfully with several of my clients.  They also share tangible actions that help break down some seemingly insurmountable walls. I recommend their book.

The way your family handles conflict says a lot about your company. Here are strategies for dealing with conflict in a family-run business…

1.     Reframe conflict.  A lot of us grew up being taught that conflict is BAAAAAAAAAD.  On the contrary, differences of opinion are healthy; diverse opinions lead to better solutions and great decisions. Pat Lencioni, in his book The Five Dysfunctions of a Team put conflict on a continuum with Artificial Harmony at one end and Mean-Spirited Attacks on the other end and said that the right amount of conflict falls in the middle. So the goal is not to avoid conflict; that’s just as unhealthy.  Instead, embrace it.  Teach the people around you to embrace conflict as well.  This will reduce the negative emotional impact on those involved in the conflict.

2.     Use a structured process.

  • First, describe and define the problem.  For example, “We disagree about whether or not it was OK for Bill to make a decision without consulting the rest of us.”
  • Explain your position.  Each side should have a chance to explain how they feel and why they feel that way.  This is a time to gather information and listen, not to engage or argue.  Ask clarifying questions, dig deeper, make sure you fully understand the others’ perspective.
  • Establish a common objective.  In almost every conflict, the parties can bring it back to some common outcome they all want. This can be a 1-sentence statement.
  • Brainstorm solutions.  This is a time to come up with as many solutions as possible. I recommend strongly you write them all on the board so everyone can ponder them. Do not critique them as they come out! Include seemingly crazy solutions as they often lead to more realistic versions that wouldn’t have otherwise been considered. Then, work together to come up with combinations. For example, “In matters under a $X, a decision only needs to be cleared by one (or two) members, instead of all of us.”
  • Rank the solutions and choose the best one. High, Medium, or Low in terms of how well they meet the Common Objective.

3.     Be calm, patient, and respectful.  Even in the middle of high-stakes conflict, it’s important to keep your head and speak courteously.  Some families develop a high tolerance for discourtesy over the years that they may not even be aware of. Use your manners! Take a break if necessary—come back to it in a few hours.  Respectful communication is honest AND it’s also kind. Another key is focus on issues vs people or personalities.

4.     Establish groundrules.  Examples:

  • Return one another’s calls and texts within 4 hours.
  • Keep all comments in the room and never outside the meeting
  • Decisions need not be unanimous but must be 100% committed after made

Don’t be afraid to step over the line occasionally—it builds confidence that the team can survive conflict. The way your family, your team, handles conflict says a lot about your company so don’t shy away from it but learn how to manage it so that its actually beneficial to the business.  Next week…. transitioning the reins in family business.