Family-run businesses

Managing conflict in family businesses

The potential for conflict in family businesses can be greater than for other businesses - typically due to a clash between commercial and emotional concerns.

However, conflict can be seen as a challenge - or even as a positive driver for change. For example, a disagreement between family members on the strategic direction of your business may result in a much-needed rethinking of your business plan and a new agreed vision for the business.

Such outcomes, though, are only possible if techniques for avoiding, managing and resolving disputes have already been instituted.

Ways to avoid conflict

Think about how people in your family business communicate with each other. Are emotional issues kept separate from business discussions? Are mechanisms in place to allow all employees - not just family members - to contribute their views? Or does one person tend to dominate?

The best way of avoiding conflict is to prevent misunderstandings from happening in the first place. Drawing up a family constitution can help you achieve this.

Plan how you'll deal with conflict and disagreements and set this out in the family business constitution, see our guide on managing conflict.

Holding a meeting of the business' management may be appropriate for addressing relatively minor disputes.

For more serious matters you may want to involve an independent third party - many family businesses benefit from having a non-executive director or business adviser - to act as an impartial mediator.

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