TWO DISTINCT SYSTEMS –FAMILY Vs BUSINESS
A family business is made up of two distinct systems that can prove to be incompatible. On the one hand there is the business, where the best talent is selected on the basis of competence, relationships are essentially contractual and limited, decisions are rational and
logical, and profits are the ultimate goal. On the other hand, there is the family, where everyone is included in the team on the basis of belonging, rather than competence. In a family, decisions can often be based on emotion rather than reason. Whereas money is the key driving force of the business, love is the currency and engine of the family unit. It is not surprising, then, that there is scope for conflict when those systems collide.
CONFLICT IN FAMILY BUSINESS
Conflict and compromise are inevitable in all businesses but particularly in family businesses. Nonetheless, businesses keep going, which is a testament to the other side of the coin–compromise. For every problem in business, there is a solution, and it often involves meeting halfway on an issue or an opinion. Managing conflict and compromise in the context of a family business requires tact, sensitivity and well-marked boundaries for interaction and behaviour.
SOURCES OF CONFLICT
Conflict can have many sources, such as unsound assumptions, disparate expectations or a lack of honest communication around what every member thinks and expects regarding the business and their place in it.To create a successful business, family members must be able to effectively work together as a team.Whether conflict is an occasional problem or is ongoing, family members must be able to effectively identify solutions and implement them.
FOUR KEY POLICIES THAT EVERY FAMILY BUSINESS SHOULD ADOPT TO REDUCE
CONFLICT:
1. clearly define the role and job title of each sibling in the business along with expectations around the level of effort/ time expected of them.
2. Adopt fair and sensible policies dealing with matters such as remuneration, performance appraisal, promotion and even dismissal.
3. Outline expectations and ambitions for the firm early on (shared vision), and understand that priorities may change over time.
4. Establish a clear understanding that when differences arise between siblings, they should sit down and discuss the issues in a calm atmosphere and endeavour to resolve the problem
themselves before seeking outside assistance.
Conflict rivalry should not be worried about unduly, it is best to face it head on. Family members may need reminding that if they look after the business, the business will look after them. A good way to mitigate conflict in a family business is to prepare a family charter with an adviser. A family charter is a statement of principles and purposes, roles and rules which is recorded and transmitted to all family members, although the charter is open to change and rewording. Family charters provide clarity on a number of issues, principles and
questions and detail the family stance on all of these. The key objective is to articulate and draft policies that will guide future actions and decisions across a broad range of areas including, for example, resolving conflict. I would encourage all family businesses to invest
time now in drafting a family charter before issues or conflicts arise.
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