Although a bit difficult to acknowledge, the fact remains that most families have faced conflict in their history. This is truer for families running a business, and if we look around us, we will realize that it is more pervasive instead of being limited to only large business families whose tales invariably find their way to print the next day.
While history is rife with family business conflicts, in our experience of working closely with all hues of business families, we have seen that there indeed are families successful at managing conflicts, and that they have a common approach in dealing with conflicts. This essence of this approach is captured in a 5-Point Action Plan.
1. Acknowledge the Conflict
The first hurdle in successfully dealing with conflict, present or potential is almost always the inability to see the elephant in the room or unwillingness to acknowledge the existence of a conflict or the potential for it.
During our interaction with families, most families initiate conversations by stating that theirs is a normal family, and there are no issues. Often, it is rooted in the desire to be recognised and seen as an ideal, united family in the society and avoid the awkwardness associated with conflicts.
Conflict is not accidental, but inevitable. When a family moves from first generation to the second and to the third, they move from singular leadership at work to multiple family members associated or involved in the family business, which essentially means difference in thought and approach typically crops up. Since in most cases, family members are dependent on the family business for livelihood and lifestyle, by the time the second and third generation gets involved, a generation gap along with self-interest is bound to occur.
Once it is accepted that difference of opinions, expectations or understanding is normal, the response towards it can be more thoughtful, and is often instrumental in keeping issues from snowballing.
2. Allow Family Members to Express
Endeavour to provide members appropriate forums and space to do so. Preferably have formal and separate spaces/forums for business issues and those pertaining to the family.
Of course, families need to make ground rules to be constructive, be respectful and mindful of reasonable concerns and requirements, and to hear out without being judgemental. Family members too have to reconcile with the fact that not all members will agree with each other’s point of view at all times.
This practice of early sorting (of family and business issues) and allowing to vent aids in keeping business matters separate family ones and vice-versa, which are usually otherwise intertwined.
It is a less appreciated fact that very often, a patient hearing and timely & clear communication is effective to nip potentially large disagreements in the bud. Formal settings, attended by family members with context, preparedness and right attitude would have a much greater chance of a timely resolution.
3. Have a Mechanism for Speedy Resolution
Do not brush concerns and grievances under the carpet. Can any business family think of carrying on without account keeping in their business? Just like the indispensable accounting system in business which records transactions and gives a picture of the state of affairs, there has to necessarily be a system in the business family to air concerns and get to a meaningful resolution through an established process.
Initiating and following formal settings will provide a platform to air grievances and ensure important issues are not ignored. As the next and equally crucial step, effective, timely and clear communication on these issues would assure family members and instil faith in the process. Senior leaders should be willing and prepared to consider fair and reasonable demands and should discuss & communicate practical alternatives after a careful thought over.
Families should recognise that there is no instant recipe for quick resolution, but patience is the key hence they should be prepared to go through iterations of the mechanism.
While some families follow one army one leader policy, others may have a more democratic voting process and yet others practice concurrence on all issues. While setting up the management mechanism, the decision-making process should be necessarily agreed on by participant members.
Take expert help in structuring formal forums, setting rules around airing grievances and responding to them. Often, experts are able to assist families to implement and run the mechanism successfully, thus avoiding the negatives which comes along with disputes.
4. A Stitch in Time
Even in the fast- paced world, Conflict management warrants time and energy from individual members and the family as a whole.
It is mostly seen that family members dread the amount of time they need to spend on conflict management and end up putting its management on backburner repeatedly. Not being able to devote time to conflict management eventually translates into spending endless time and huge costs on conflict resolution, negatively impacting both family and the business. The later the stage at which family starts to resolve or manage conflicts, greater is the damage already done. This makes an early start vital for conflict management.
Timely planning around critical issues like business and wealth succession, decision making processes, control, ownership and management can potentially prevent or contain large conflicts for several generations. It is because by recognising inherent areas or any early signs of conflict, it is possible to structure solutions around them. Very often, timely planning is able to avoids creation of any fertile ground for conflict for a foreseeable future.
There are multiple long-term solutions possible for each potential issue such as Succession plans involving evolved tools like Trusts, testaments or family arrangements, Governance plans at both business and family level with tools like customised reporting, appropriate checks and balances, Family Constitutions or Shareholder agreements, Formal Forums like Family Councils or Family Business Forums etc.
Though all these steps require a vision and patience, we could say from our experience of working with families that such planning significantly increases the longevity of the family business and reduces chances of massive conflicts.
While family members are best placed to manage conflicts vis-à-vis the family and emotional aspects, conflict management on crucial issues might require certain expertise and professional help. An expert not only brings experience of managing conflicts and helping families, but also brings an independent perspective of how issues could be handled without probable baggage of historical family specific experiential biases.
Though families should try to manage the conflict by themselves, they should not hesitate or delay in involving a skilled expert to help set up a formal process for timely resolution and to intervene in already brewing disagreements.
The best and long-term solution providing approach towards conflict resolution is the one driven by consensus, and Experts help is usually beneficial in bringing the family on one page even on tricky issues.
Conflict Management is precisely that – making parts and whole of the conflict manageable by planning it well in advance thereby removing the elements of uncertainty and unpredictability to the best possible extent. It is not about reacting to conflict as much as it is about being proactive, planning in advance, and acting at the right time.