Article:

Communication

11 April 2011

Susan Rix AM , Partner, Business Services |

Conflict and communication in the family business

Difficulties arising from the overlap of family and business systems cannot be avoided entirely. However, successful families devise strategies that help them to keep the overlap under control, and to minimise the major problems that arise when one set of values engulfs the other.

Attempting to separate family and business life completely is the first response of many people when they begin to see the danger signals. But as well as denying the reality of family and human behaviour, this strategy jeopardises the sources of commercial strength which flow from the family relationship – loyalty, commitment, sharing in a common enterprise, flexibility, and so on.

A Balanced Approach

A much more effective technique lies in developing strategies that help recognise and analyse family and business issues, and then address them directly to ensure the correct degree to balance between the competing systems. The ‘correct degree of balance’ is one that allows the business to be run properly while not disrupting family harmony, and a key ingredient of this is ‘preventative maintenance’ – i.e. doing something about the huge range of problems and that can afflict family businesses before they take hold.

As we have seen difficult areas include family friction, personal dilemmas, management issues and succession, and within these broad categories the number and scope of individual problems is often bewilderingly large. Two approaches that can be particularly useful in helping families to anticipate and avoid these problems are:

  1. The holding of regular family retreats and communication sessions, perhaps involving the establishment of a ‘family council’
  2. The development of a written charter for the family business, reflecting both family and business values.

Defining and articulating the family’s relationship with the business is invaluable, and it’s best to record conclusions in a formal, unambiguous family charter.

Drawing up a charter also helps family members reflect on and come to terms with some truly basic questions, such as ‘Do I want to work for the business, or do I want the business to work for me?’

Drafting and agreeing on the charter should form an integral part of long-term family strategic planning. Such planning provides a structure opportunity for the family to assess and organise its relationship to the business. It also exerts needed pressure on individual family members to face up to the difficult emotional issues that, uncontrolled, can be damaging to the business.

Recent Family Business Survey conclusions included the view that although family businesses appear better able to handle a volatile economic climate, misalignment of business and family goals, lack of governance structures and inadequately planning for the future may mean they aren’t as well equipped to handle a downturn. These conclusions clearly support the need for embracing the approaches suggested earlier in this article.

Recent Family Business Survey conclusions included the view that although family businesses appear better able to handle a volatile economic climate, misalignment of business and family goals, lack of governance structures and inadequately planning for the future may mean they aren’t as well equipped to handle a downturn. These conclusions clearly support the need for embracing the approaches suggested earlier in this article.

Ten reasons to hold regular family meetings

  1. Unite the family
  2. Strengthen the business
  3. Educate successors in understanding and managing wealth
  4. Discuss succession
  5. Develop and enhance shared family values
  6. Decide who will work in the business
  7. Decide policy on future ownership of the business
  8. Professionalise the family
  9. Ensure smooth communication between the family and the Board
  10. Understand and resolve conflict

Mutual conflict resolution

Mutual conflict resolution means that all parties’ needs and feelings are respected and, whenever possible, all parties accept the solution of the problem as fair. Some thoughts to keep in mind:

  • Anger is legitimate within the family and can be expressed in healthy ways
  • It is always preferable to settle conflict without verbal or physical violence
  • Conflict can be viewed as the challenge of solving a problem, not as a war to be won or lost
  • In any conflict situation there are many alternative solutions available
  • At any point we may say we are sorry for handling conflict negatively and begin again with a firmer commitment to mutual respect
  • Mutual conflict resolution is not appropriate to all conflicts; it is dependent upon all parties in the conflict wanting a solution that benefits everyone
  • Mutual conflict resolution takes time; it should not be attempted if a decision is needed quickly
  • It is important to enter the discussion without a preconceived or fixed solution.

Steps in mutual conflict resolution

  • Bring together all parties involved in the conflict
  • Identify the conflict. Be specific and thorough. State the conflict in a way that does not communicate blame or judgement; listen openly to the feelings.
  • Identify each individual’s need in the conflict; the needs can be different from the wants and are often the key to the solution
  • List all possible solutions, both crazy and sensible, without evaluation
  • Star solutions acceptable to everyone and discuss their outcomes and effectiveness
  • Choose one that best meets everyone’s needs and make a plan to carry it out
  • Set a time to evaluate the solution.