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Managing Conflict Creatively in Family Business
Keys to Success

Did you know what two abilities have the most to do with longevity and success in family owned businesses? Well, if you guessed strategic planning and conflict management then, you're correct. In the last issues of Key Ideas, we discussed strategic planning in family businesses. Now, it's a discussion about conflict management.

What's So Important about Having a Conflict Management Process?

You've probably heard the saying "the bone is strongest where the break heals" (that is actually medically true!). The same applies to relationships, and this may, if fact, give family firms a competitive edge. Unresolved conflicts are harmful and put the family and business at risk. Family companies are emotional systems that are more likely to have conflicts. Families and businesses that have developed effective ways of managing conflict are those most likely to survive and thrive. Several studies on marriage and families suggest that the largest number of marriages fail because of lack of conflict regulation techniques. In my work with families in business, I have observed that those who do well are those who have found ways to regulate and appreciate differences of opinion even if potentially explosive. They enjoy a competitive advantage, as they are better able to work together, trust each other, and react faster to the changing economic environment. It also leads to better, wiser decisions. I have also found that families who were good at compromising and conflict regulation had less sibling rivalry among the children.


  • Conflict is normal; differences of opinion are healthy

  • Managed conflicts are beneficial
    • Build self confidence in emerging leaders
    • Strengthen bonds
    • Create rich diversity, more options

  • Must be dealt with quickly and fairly

  • Process is as important as outcome

  • Hard bargaining is a poor second to interest based negotiations

What are the Benefits of Confilct Management?
In his book, Centuries of Success, (reviewed in this issue) the author, William O'Hara, observes that "most of the families have come to realize that conflict itself is not necessarily bad, but that the inability to manage it is a source of much difficulty."

Prevention is best, of course
The following are 'best practices' to prevent conflicts:

  • Clear strong leadership, meritocracy based.

  • Family employment policies: compensation, employment, exit and entry, reviews.

  • Formalized family meetings.

  • Strong, effective governance with independent board.

  • Formalized family meetings for processing individuals beliefs and creating shared understandings.

  • Communication is open and direct.

  • Good HRM practices in the business for family as well as non-family employees.

  • Dealing with issues and conflicts as they arise in a direct, timely and open-minded way.

What are the unique challenges for families in business?

Families in business have much greater challenges; the stakes are very high. Relationships and assets are at risk when conflicts are not managed. The family is an emotional system that can be the 'glue' but can often derail sound business decisions and create rifts. Since families exist in past, present and future, in emotional time, the past is always present. Old hurts, loyalty challenges, disappointment can last a long time.

What to do with conflict?

Remember any human system is also an emotional system, with a long, complicated history, working in emotional time. In any emotional system, a fair and timely process offers safety and predictability.

  • Establish a fair process
  • Build in safety and predictability so individuals will know what to expect
  • Get buy-in from parties
  • Use it!

What comprises a good, fair process?

Here are steps to follow in managing any conflict:*

  • Ground rules
    • Who are the critical decision makers?
    • How will we make this decision?
    • How long will we give to this?
    • What are the rules of engagement?

  • Initial Positions
    • Statement of problem
    • Statement of each parties position

  • Interests
    • What do they each care about?
    • What is the motivation for taking their stands?
    • This answers the question 'why'?

  • Create solutions
    • "Out of the box" thinking
    • Invent options
    • Brainstorm

  • Get objective criteria for each option
    • Reality check
    • What is the industry standard?
    • What are the requirements for that position?
    • How do we review that investment strategy?

  • Reaching/crafting an agreement
    • Open discussion of the choices
    • Weigh the options
    • Combine elements, if possible
    • Make the decision.

*Key Resources specializes in helping family firms through these steps successfully.

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