Schools Training

Dealing With Conflict In A Family Business

2 JAN 2015
Career Path : Administration

online business degree

When a family joins together to start a business, there will no doubt be conflicts. Family members have a history with each other that can sometimes complicate professional collaboration. Rather than following formal management structures, some family-owned companies are much too relaxed. This can lead to problems with the growth and profitability of the company. In other cases, family issues best left at home are brought into the business. But despite these common challenges, there are ways to effectively manage and resolve conflicts that grow out of a family-owned business.

Family Members On The Payroll

A common and serious conflict can occur when family members are placed on the payroll without making any actual contribution to the company. At the start of a business, it is assumed everyone works in all aspects of the company. There will come a time, however, when pay needs to match contribution rather than outweigh it. Job titles, function and compensation must be clearly stated early in the company’s foundation to prevent future resentments. Other funding issues may arise if, for instance a company is using a relative as a supplier, when there may well be better deals available with another source.

Managing Conflicts

The success of a business will be an emotional issue for all family members involved. Therefore, it’s important to set rules so that differences of opinion are resolved respectfully. Conflicts need to be addressed quickly and fairly. When managed correctly, employees familial and otherwise will develop confidence in the established leaders. It can also strengthen the emotional bonds between family partners in business as opposed to weakening them.

Family And Business Decisions

It’s important for family members not to confuse businesses decisions with personal family decisions. A company vehicle, for instance, should not be operated unless it’s for business purposes. By the same token, it should be agreed that family needs will not be met with business resources. As a general rule, the less bleed-through between family and business decisions, the better.  Earning an MBA online for example, could be considered a legitimate business expense. A vacation, however, should not be listed as such.

Conflict Is Not All Bad

Many times, conflicts arise in a family-run business because all members have ideas on how to make the business succeed. These conflicts can become a problem if not properly managed, though hearing from all parties concerned is never a bad business decision.  It also allows each member of the family to feel like a valued contributor.  Many times formalized family meetings can help clear the air. Efforts should be made to keep communications open, honest and direct. The chain of command needs to be identified and the leadership must be strong. A process for dealing with conflict needs to be established.

Family And Non-Family Employees

It is important that a family owned business not create two different types of employees. Assigning authority based on family and non-family status can build resentment. Family members may have more access to decision makers than regular employees. This could harm the motivation of regular employees. It could hurt the company if regular employees believe a raise or promotion is not possible because they’re not a member of the family. The opportunity to earn an online business degree could be made available for all team members, family and otherwise.

What’s the number one rule you would follow to manage conflict in a family-run business?