Conflict and managing resolution for family businesses

Conflict in business is normal but what can make it harder to resolve is when it involves family members who are working together in the business.  This can often lead to disputes taking longer to resolve and having far wider consequences outside of the workplace.

Issues can vary from tensions over money, succession, business direction, the appointment or promotion of family members and non-family members into senior positions or just different personalities clashing.

Failure to deal with conflict, especially in family businesses can be very damaging to the long-term success of the business.

Conflict can of course happen at any time but there is usually a catalyst for it.  For example, discuss succession planning well in advance of it happening, so that everyone has a chance to share their views.  Ensure there is sufficient support, mentoring and training for the successors. Not everyone has the skill set to be running a business, but there are many other key roles that they might be suited to.  Agree family priorities which can be drafted into a family charter.  This can help to address many issues especially the financial expectations of those who have an active role in the business versus those who don’t.  Keep spouses and partners up to date with information so that everyone feels involved.  Good communication can often help to diffuse situations before they escalate.

Where conflict continues and communication breaks down or an agreement can’t be reached then mediation can help, but often in family-owned businesses it is better to start this process early before the conflict escalates.

The mediator will be both impartial and independent and will help the parties to negotiate their own settlement.  The difficulty with family businesses is that there is more than just the business relationship at stake.  A mediator will work to engage with everyone separately, help work through the issues and then act as a bridge to drive forward a resolution to which everyone agrees.

In the event that mediation fails then there are other options.  There could be a separation of responsibilities so that different parts of the business are run by different family members.  There could also be a buy-out arrangement where family members agree to buy the interests of the other family members and there are a number of ways of doing this which makes it affordable and could still provide some involvement in decision making.

The business could bring in independent non-executive directors or a non-family chairman to help make decision making more effective and objective and to help break a stalemate in voting.

Some families might decide to step back from the day to day running of the business altogether and to transition to a fully non-family management team, where the business is large enough to support this.

Sometimes the best decision for everyone is to sell the business, especially where the next generation does not want to be involved in the running of it or does not have the skill set to competently take it over.  Options here could include selling all or a majority holding to a management team within the business with the family retaining a small interest.  This would help to provide continuity for employees and customers and can often help a business break free of the issues that have previously held it back.

We are here to help make your business a success for the future, so if you are concerned about conflict, get in touch to discuss how we can help you to overcome this.

Philip Grylls can be contact at p.grylls@gullands.com or Sarah Astley at s.astley@gullands.com