The Most Common Bones Of Contention
24th February 2018 Elle Hansen, Regeneration Partners
“All happy families are alike; each unhappy family is unhappy in its own way,” reads the opening line of Leo Tolstoy’s novel, Anna Karenina so let's consider this in the context of family firms.
Experience in the world of family business consulting shows there are in fact many different ways family firms can be unhappy and in conflict. There are five major wellsprings of conflict.
Money is probably the biggest source of family business conflict. Actually, it’s more than money. Benefits, privileges, and other forms of compensation both financial and non-financial should be included here.
Compensation can create conflict if family members are paid differently for equal jobs, or are paid the same for doing different jobs. It can crop up when non-working family owners feel employed family members are taking too much out of the firm. And, of course, when it comes to passing ownership to the next generation, division of assets is a frequent source of conflict.
Rivalry is another potent conflict generator. The classic rivalry is between siblings vying for prominence and promotion, but rivalry is as likely to be intergenerational. During deliberations about succession rivalry between different candidates and coalitions aligned with those candidates is apt to be particularly intense.
Power and the struggle for it lies behind many family business conflicts. Some family members with greater power may try to control personal and professional lives of other family members. For instance, a strong and in-control parent who distrusts a son or daughter’s ability and commitment may refuse to let his or her offspring exercise any real management authority.
A next-generation family member whose actual responsibilities don’t match his or her job title may well resent this, leading to conflict. Power struggles can erupt between members of the same generation and especially between siblings.
Confusion about rules, roles and responsibilities is another common area of conflict. Every family and business has rules to guide and govern members and employees. In a family business, questions may arise about which set of rules applies in a given situation. Should a parent correcting a son or daughter be loving and supportive? Pragmatic and blunt?
Family rules may support one approach and business rules another, leading to potential for conflict. In addition, some family businesses have few explicit rules. When the founder makes decisions by the seat of the pants without established guidelines or standards, the lack of rules can confuse everyone, and generate conflict.
Boundaries, or the lack thereof, can split business families into conflict. For example, when a family member engages in workplace behavior that would be tolerated at home but is considered disruptive at work, it may not be clear which set of standards to follow. Without agreement where the line is drawn, conflict looms. Other boundary issues may come into play when family business members react to a present situation in a way appropriate to some past situation.
For example, an older sibling may treat a suggestion from a younger sibling in a way that was accepted when they were children, but isn’t now. In addition to home and work and past and present, boundaries may be unclear when it comes to personal and professional behaviors.
There are other potential sources of disagreement but, with due respect to Tolstoy, these five are likely to lie at the heart of most family business conflicts.
About the Author - Elle Hansen is the Managing Director of Regeneration Partners, a firm of consultants specialising in advising the family business sector. Please visit their website to find out more here