“When family members are owners, employees, or related parties, you can double the chances of personal or professional conflicts. With an experienced mediator, you should be able to redirect that energy as a force to better navigate family business conflicts. – Mark Fallon of Alternative Law
Balancing personal and professional relationships within a family business can be tricky. Unstructured businesses without proper conflict management programs can exacerbate these tensions.
Common Family Business Conflicts
Rivalry:
Rivalry among family members can be a common source of conflict in family businesses. This can occur between parents and children, or siblings, particularly those involved in managing the business.
The reasons for rivalry can vary, but often involve a desire to outshine others, establish authority, or exert control over business decisions. Such competition can create significant tension and strain relationships within the family.
Favoritism:
Favoritism can be a pervasive issue in family businesses. Often, older children may receive preferential treatment from parents, even unintentionally. This can lead to resentment and feelings of inadequacy among younger siblings.
When favoritism extends to the business, parents may delegate control to older children, requiring younger siblings to work harder to prove themselves. Additionally, nepotism can arise when family members use their influence to hire unqualified individuals, potentially harming the business.
Intrafamily Friction:
Family members may expect preferential treatment in closely-knit family businesses. However, business owners or managers must make firm decisions about hiring relatives, especially for positions that do not require specific qualifications.
Financial Disputes:
Financial disputes are another common source of conflict in family-owned businesses. Poor financial management can lead to significant losses. Additionally, family members may have unrealistic expectations about spending business funds, believing they are entitled to use them freely.
Tips for Preventing, Resolving and Navigating Family Business Conflicts
- Hire Wisely: Avoid hiring family members unless they are qualified and can contribute meaningfully to the business.
- Hold Regular Family Meetings: Create a space for open communication, planning, and addressing concerns.
- Establish Shared Values and Goals: Align family members around a common vision for the business.
- Implement a Structured Conflict Resolution Process: Establish a grievance committee or council to handle disputes objectively.
- Seek Mediation: If internal resolution is not possible, consider bringing in a neutral mediator.
By proactively addressing these issues and fostering a positive family environment, you can overcome conflicts and ensure the long-term success of your family business.
If you are interested in using mediation to help relieve conflicts in your business. Let us know.
Alternative Law is here to help ensure your family business’s long term success.