50 Common Causes of Family Business Conflict ... and how to deal with them

50 Common Causes of Family Business Conflict and how to deal with them.  

Family Business Mediation Video No 50.  Cuckoo Consultants.   

By Jon Kenfield. Family Business Mediator. Solutionist.  

• This video is unique amongst the 50 in this series in that it looks to an entirely external conflict generator that can act upon the family - as opposed to the other 49 causes, where the family does its own great job of creating its very own conflict.  

• Cuckoo consultants come into family business environments, usually from a business background, sporting business-based credentials and perspectives.  They create confusion and conflict by promoting perfectly appropriate business advice to the wrong people, in the wrong way.    

• They sound sensible, logical and commercial, but their advice is completely unworkable.   

• The problem lies in their ignorance of the unique requirements of family business - much as a cuckoo has no concern for the eggs it turfs out of a host nest to make space for its own egg.    

• Cuckoos can be existing trusted advisers, keen to protect their clients from outside consultants (the flea wishes to own the dog); consultants from HR or “normal” business backgrounds who believe they have the required experience and skills; advisers who don’t know what they don’t know; or ones who just don’t care.  

Solution  

• Approach all adviser engagements as life or death projects - because they could be, for your family and for your business.       

• Check every proposed adviser’s family business advisory credentials, including training, experience and, most importantly, real testimonials and referees.  

• Don’t rely on accreditation alone.  Real knowledge and experience, and demonstrable skills, are far more important.  

• Meet them, ask questions and judge their answers.  

• Importantly, as with all adviser engagements, assess them for the quality of the questions they ask you.  Any adviser that proposes or recommends doing anything before they have a reasonable understanding of your needs is a salesperson, first and foremost.  In all probability, that’s not the key skill you’re looking for.  

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50 Common Causes of Family Business Conflict and how to deal with them.  

Family Business Mediation Video No 49.  Non - Family Conflict Causes.  

By Jon Kenfield. Solutionist.  

• Can non-family people create conflicts within the family business?  You bet!  

• Family Business are notorious for creating cliques (read your Shakespeare!):  supporters for Mum vs Dad; for siblings against other siblings; for one generation against another; and for getting all family out of the business - so it can be run properly!   

• Motivations may be pure, or not, and may be driven by the best interests of the business, or not.  It depends.    

• Most employees and advisers have their loyalties tested when family businesses reach certain tipping points, and something major has to happen.  Employees, at all levels, are obliged to consider their own, and their families’ situations and futures, while advisers can be conflicted into supporting the person who pays their bills.  Is that now, or longer term?  Who knows?    

Solution  

• To prevent individuals getting behind family members and creating / broadening conflict, the family needs to be able to present a united front about where things are going, and with whom.  This requires a Plan.  

• The Plan needs to reassure everyone that the family’s focus is on the future of the business, not on who may lead the business.   

• The family also needs to make clear to everyone that it doesn’t welcome partisan support for individuals against others.   

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50 Common Causes of Family Business Conflict ... and how to deal with them.  

Family Business Mediation Video 48. Old Retainers.   

By Jon Kenfield. Family Business Mediator. 

 • Old retainers area a common cause of conflict in family businesses where Mum or Dad has worked with “old Phyllis / Sam” since the early days and has made promises that “we’ll always look after you”. The new business leaders are being made to feel obliged to honour these promises.  

• Problems:  

o The old retainers are no longer adding much value to the business and,  

o They’re always suspected of spying for Mum or Dad on their successors and,  

o They can undermine modernisation attempts because “that’s not the way your father/mother would have done it”.  

Solution  

• Work out what, if any promises have actually been made, and the family’s appetite for dealing with the situation, now it’s been openly ventilated.  

• Compare the old retainer’s competencies and contributions against objective HR requirements to get a proper baseline fix on the scale of the issue.  

• Negotiate, or impose a more constructive employment arrangement, if possible and appropriate.  

• Negotiate, or impose an exit plan, if appropriate.  

• Whatever you do, ensure that the final solution is approved and supported by Dad or Mum.  

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50 Common Causes of Family Business Conflict ... and how to deal with them.  

Family Business Mediation Video No 47. Emotional Trauma.   

By Jon Kenfield. Solutionist & Family Business Mediator.  

•  Psychology is the science of understanding how people think, feel, behave and learn.  

• I’m not a psychologist - other than at the “chicken soup” end of the scale - however, more than 20 years spent working with denizens of business families provides many opportunities to observe how people do actually think, feel, behave and learn - and the consequences for themselves, their families and friends, and the people they work with.  

• Personal emotional trauma sits quite high amongst serious causes of conflict in those business families.    

• Sometimes causes were accidental:- unforeseen and uncontrollable events, such as a home or car accidents.  

• Sometimes economic or political - recession, depression, or war.  

• Sometimes environmental - fire, flood, famine, drought, pestilence.  

• Sometimes domestic - violent or abusive homes; absent, broken, inadequate or misguided parenting; lack of emotional intelligence or support.  

• All causes create trauma.  All trauma can lead to disruptive behaviours and dysfunctional relationships and, while these can be countenanced in a family they don’t go down well in business.  

Solution  

• The first and by far the most important response is:  take courage and be honest.  If a family member’s emotional trauma is causing bad behaviours, somebody has to own the problem and help to create a solution - the damaged individual almost certainly can’t do it alone.    

• Don’t hide reality due to personal guilt, embarrassment, or excess of protectionism - that only reinforces bad behaviours and eventually leads to explosion or implosion.  

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50 Common Causes of Family Business Conflict ... and how to deal with them.  

Family Business Mediation Audio No 46:  Ethnic Issues & Cultural Norms.   

By Jon Kenfield - Solutionist and Family Business Mediator.  

• When a family’s culture is strong, it can exert powerful influences on personal expectations and behaviours - both in the family and in its business activities.  

• Most ethnic cultures are based on historic traditions which, by definition, are anchored by the past: from another time, another place, and usually very different circumstances.  

• These cultures may make little sense, and have limited appeal, to people who haven’t grown up immersed in them - which is the classic situation for first and second generation migrant families from a troubled Europe.  

• We often see something similar with Asian families - when parents had a traditional upbringing, and their children have grown up in modern Australia.  

• When “old-school”, ethnically influenced decision-making produces business decisions that are seriously out of step with modern (normal) commercial thinking - over anything from business leadership and family succession to business investment - cultural differences and generational tensions flare into catalysts for frictions which, left unresolved, lead to conflicts - with current and next generation family members, and non-family employees. The consequences can become very unpleasant.  

Solution  

• Respect differences: there’s nothing wrong here, just an inappropriate and probably unworkable mixing of family with business decision-making that’s failing to satisfy anyone, and everything.  

• Separate family from business decision making.  

• Create separate plans and rules for each.  

• Establish separate structures and different processes - and remember which environment you’re in when making decisions.  

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50 Common Causes of Family Business Conflict ... and how to deal with them.  

Family Business Mediation Video 45  Lack of Talent in the Family.  

• Business founders are often driven individuals.  They may be motivated by creative drive, frustration in another job, identified opportunity, need to work, obligation to provide work for family members, or many other possibilities.    

• Following generations are usually less driven, mainly because they have a less desperate need to make a business in the first place.  

• As businesses grow and evolve, their needs change.  They may require more advanced technical, commercial and management skills.  Founders, and in-place leaders may develop these skills, or not.  Their progeny may develop required skills, or not.  

• As families grow through generations, the talent pool in the family may broaden, as business needs increase.  When businesses grow strongly, families generally can’t keep up with their needs and have to recruit non-family specialists and professionals to help.   

• Some families cling to the belief that some or all leading roles should be occupied by family members - despite this being objectively impractical.  This can lead to wrong people in wrong positions in the position - an obvious cause of conflict. Solution  

• Start with family values - what does the family actually want; what do individual members want?  - to be happy, or to be working in the business?  

• Do they work to live, or live to work?  Is it a family first, or business first family?  

• Once these questions have been worked out to everyone’s satisfaction, a Family Plan can be developed that works towards satisfying everyone’s desires.  

• Part of the planning process involves assessing current resources, including personnel resources, and especially family member capabilities and intentions.  

• If completed early enough, family members can be educated and trained towards appropriate future roles in the business, preferably from their childhood.  

• The Family Plan should be synchronised with the Business Plan.  The issue of family talent can then be made a structural discussion, rather than a personal one.    

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50 Common Causes of Family Business Conflict ... and how to deal with them

Audio No 33: Family Succession & Continuity.

• This is a big one for conflict! Family succession and associated control of family wealth can be even more confronting than taking over control of the business.

• Loss of family leadership can feel like a loss of relevance and identity.

• Owner has reservations stepping aside, successor is in a hurry to step up.

• Succession should be a process over long time. Plenty of opportunity for tensions to rise.

• Outgoing leaders require financial security, and releases from liabilities. Need to be confident before handing over responsibility for future family stewardship.

• Incoming successors need freedom to stamp their personalities on the family after the changing of the guard.

Solution:

• Create, negotiate and agree a succession plan, over time, through an inclusive process that takes everyone on the same journey.

• Agree attitudes towards Stewardship and Legacy and formalise objectives, expectations and processes.

• Communicate, communicate, communicate to all stakeholders throughout the succession process.

• Recognise the outgoing’s fear of the abyss & respect its reality.

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50 Common Causes of Family Business Conflict ... and how to deal with them

Expectations & Entitlements.  

By Jon Kenfield. Solutionist.  

• Family membership may create unjustified and unsupportable expectations of rewards or benefits from the business - cars, phones, credit cards for personal expenses etc. These are sometimes caused by parental generosity that becomes unsupportable on an economic basis.  

• Family employment raises obvious Performance & Remuneration issues.  

• Popular myth that family members must put in 120% effort by employees. Rarely achieved, except in founding generation.  

• Sense of entitlement is a common problem:  o Protected species.  o Rewards / high pay for family name - not for effort, contribution, or ability.  o Job security without objective accountability, resentment amongst hard working family members and staff.  

• Parental promises are often taken into the business, without disclosure. Usually creates clash with other staff, managers and supervisors, and HR policy in general.  

• Parental obligations taken into the business create problems between parents when rose-tinted expectations are deflated by work realities.  

• Solution: establish objective employment, performance measurement and reward criteria in the business (HR task) and ensure its congruence with family rules.  

• Satisfy family expectations that are not proper business considerations out of family funds, transferred out of the business. There you can apply whatever family criteria seem good to you, without reference to commercial commonsense.  

• Make objective employment criteria a family requirement in a Family Policy or Family Constitution document - then it isn’t personal, when the issue comes up. 

Ensure that the policy is congruent with business HR policies and procedures.  

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50 Common Causes of Family Business Conflict ... and how to deal with them

Employing Family Members.   

By Jon Kenfield. Solutionist.  

• Family business = private business, legal & practical ability to do whatever.  

• Prime reason for many family businesses’ existence is to provide employment for family members, (especially those with sub-par employment prospects, in the eyes of their parents).  

• More complicated in 2nd and subsequent generations, because there are more stakeholders, coming from multiple households  exponentially more complex family dynamics.  

• If family members fit in = OK, provided they aren’t resented by staff (loss of expectation of career path etc).  

• If family member doesn’t fit in - work ethic, personality, attitude towards staff etc, major issues. Good staff leave; loyal and bad staff stay. Loyalty is usually personal to the leader, not to the family.  

• Junior roles are usually OK. Senior roles need to be on merit, or everybody’s future is at risk, and staff push back is almost inevitable.  

• Solution: establish objective employment criteria in the business (HR policy task).  

• Create formal performance management system, with:  

o Detailed job descriptions.  

o KPIs.  

o Objective competency requirements.  

• Make objective employment criteria a family requirement in an agreed Family Policy or Family Constitution document. Then it isn’t personal, when the issue arises, and business and family procedures support each other. 

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50 Common Causes of Family Business Conflict ... and how to deal with them

Modernising & Professionalising the Business.  

By Jon Kenfield. Solutionist.  

• Clash between old and new, conservative and progressive, positive and negative, proactive and reactive.  

• Usually an inter-generational, age-based issue.  

• Incumbents are invested in past and present; successors are looking to the future.  

• Aged owners may be fossilised - they either resist change, or can’t physically make changes.  

• Common for upcoming generation to invest too much in IT to marginalise owners / parents. When it goes wrong / over-budget - creates conflict and concerns re judgement of potential successors.  

• Also common for parents to indulge next gen by allowing them to enter into contracts that stamp their authority on the business - enthusiasm and poor judgement can make this go horribly wrong - and threaten the business as a consequence.   

• Solution:   

Take a gentle approach. Negotiate acceptance of change through inclusive planning (on-boarding) and help with visualising next life stage.   

• Create new, appropriate and attractive role for elders as Sponsors of change, using family members and interests to create extra leverage.  

• Move human blockers into non-operational governance roles so they can’t interfere with change project.  

• Empower staff to make changes - reduce dependency on current leaders and create experienced support team around ascending generation. 

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50 Common Causes of Family Business Conflict ... and how to deal with them

By Jon Kenfield. Solutionist  

• Classic cause of conflict - competing financial needs and interests.  Family needs money to live on; business needs money to ensure sustainable trading.  

• Family money is for personal use, which may be necessities, luxuries, or anything in between.  Time frames are personal and subjective.  

• Business money is to maintain competitiveness and generate profits. Time frames are commercial and objective.  

• Assuming money is a scarce resource, getting the balance right is always challenging.  Solution:    

• Clarify personal and business needs and expectations (long term perspectives make it easier to suffer short term pain).   

• Develop financial plans so everyone knows what is likely to happen and what their role is in making it happen.    

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50 Common Causes of Family Business Conflict ... and how to deal with them

Confusing Roles: Owners, Leaders, Managers & Employees. The Dotted Line!  

By Jon kenfield. Solutionist.  

• Conflict flows from confusion and attacks.  

• A fundamental source of confusion is lack of role clarity.  

• Another revolves around unjustified change. That’s not  the same as unwarranted change - unjustified means “not explained, therefore not accepted or supported”.  

• According to business best practice, leaders, managers and employees all have clearly definable roles in a business. Clarity provides Certainty & Confidence.  

• Owners should be placed off to the side in any Org Chart. They have no definable role in the business, and their interests can clash with business imperatives.  

• Owner interventions also confuse everybody in the chain of command.  

Solution:  

Create an Org Chart with a dotted line separating strategic & governance roles from operational responsibilities.  

• Leaders (directors) should stay and operate above the dotted line (governance).  

• Everybody else operates below the line (doing the doing).  

• Leaders can go below if they have a specific operational roles.  

• Develop detailed job descriptions and appropriate KPIs so everybody knows what’s expected of them and how their performance will be measured.  • Establish discipline in the business structure - above and below the dotted line. And have an isolation box for owners to stay inside!  

• All business employees need to perform. When owners try to re-write that rule (perhaps in support of a non-performing family member) business systems and discipline suffer.  

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50 Common Causes of Family Business Conflict ... and how to deal with them

Ages & Stages - Conflicting Financial Needs.  

By Jon Kenfield. Solutionist.  

• Major cause of conflict - generated by different needs during different ages & stages, compounded by life’s usual complexities.  

• When young - home & mortgage / family / school fees / collecting “toys” + prospect of many more years in the business.  

• Willingness to invest in risk - less to lose and more to gain.  

• When old - fewer operating expenses, but long period of not working and not earning is now an immediate concern.  

• Less return on investment in business and greater need for personal financial security - more focus on self, and less on current & future business.  

• Fear that family members (usually not those working in the family business) will be left having to support aging and ailing parents.  

• Solution: individual & collective financial plans that address everybody’s (especially parents’ ) needs as well as possible, & reassure the whole family that things are under control.  

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50 Common Causes of Family Business Conflict ... and how to deal with them

Differences:  Needs, Wants & Interests | Perspectives &  Behaviours | Respect & Rewards.  

By Jon Kenfield. Solutionist.  

• Arguments and conflicts come from lack of:  Shared Visions, Plans, Goals & Commitments.  

• Shared Visions Goals, Strategies & Plans are aspirational focal points that start with built consensus & are sustained by continuing effort & performance.  

• Lack of … leaves people to invent their own expectations, realities, & stories - encouraging leaders to create their own paths, while followers get confused.   

• Solution: take time & make effort to build, adopt & implement shared plans.    Engage family members and key staff in the process.  

Use it to:  

o Encourage regular communication, meetings & problem solving.  Increase communication & negotiation skills.  

o Increase respect as everybody has clearer expectations and assigned roles.  

o Build trust through observable reliability & performance.  o Focus on larger goals whenever confusion, demotivation or conflict arise.        

o Share & increase personal and group resilience.     

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50 Common Causes of Family Business Conflict ... and how to deal with them

Parents as Bosses: Nature vs Nurture vs Independence.  

By Jon Kenfield. Solutionist.  

• Nature vs nurture goes back to the Greeks: innate qualities vs learned / conditioned behaviours and abilities.  

During the growing up years, Nature and Nurture interact within the Family System to shape individual personalities and core family dynamics. The results can cause serious conflict when they move into a business system, where consequences are magnified.  

• Family Business = Double Whammy:  o Parents at home vs Boss(es) at work and,  o Siblings at home vs professional colleagues at work.  

• Many sibling conflicts arise through parental over-protection (nurture) of one weak / needy sibling over another who is more independent & resilient:  o Excessive and overly-prolonged support tends to increase dependency on parents for life skills and financial sustenance, as well as work competencies.  o Independent children may resent dependent children who are treated equally by parents and bosses, despite unequal efforts, commitment and contribution. (Unequal abilities are usually ignored).  

• Entirely appropriate Parenting styles may not translate well into business operations:  

o Nurture vs Competition can create conflict when (unconditional) family love, emanating openly from one part of the family (ie: Mum) crashes against the business’s need for performance from a boss (often Dad).  

o It throws mother against father, and siblings against each other.  

• Modern business is more inclusive and collaborative - playground lessons?  

• Resilience is a product of teaching & requiring independence - owning issues and challenges; choosing how to deal with them; accepting responsibility for handling your own stuff, without running off to Mummy for a fix, and a cuddle.  

• Solution: create and require adult independence & resilience in business. Obtain coaching support if this conflicts with the family’s normal model.  

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50 Common Causes of Family Business Conflict ... and how to deal with them

Family Systems & Skills - Teamwork.  

By Jon Kenfield. Solutionist.  

• Families tend to assume that their “familyness” means they naturally work well as a team, but the reality is often far from the belief - which easily leads to conflict when expectations are seriously mismatched and badly unmet.  

• The quality of teamwork has a lot to do with group culture, shared goals and values, respect, trust and inclusion. Teams function best when they have worthwhile tasks that place demands on neutral reliability.  

• Solution: start building the family team from a young age to get family members used to the idea of working with other family members.  

• Within the family, philanthropy and investment committees, along with social and holiday committees, provide good opportunities for developing collaborating skills and teamwork.  

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50 Common Causes of Family Business Conflict ... and how to deal with them

Family Business Mediator. Family Systems & Skills - Respect & Trust.  

By Jon Kenfield. Solutionist. 

• Families & family businesses tend to believe that their “familyness” automatically confers high levels of honesty, integrity, respect & trust, where sometimes the very opposite is in play: very low levels mutual trust due to the perception of lack of personal respect and/or reliability in the performance of promises, especially those given privately that relate into the business.  

• The family business curse refers to the damage that business relations can inflict on family groups when decisions are made in & about the business that adversely impact family members, family as a whole, or part of the family.  

• Solution: develop a family plan with clearly allocated roles, responsibilities and accountabilities. Use the planning process to reconnect family members to commence the rebuilding of respect, which is stepping stone toward rebuilding trust.  

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50 Common Causes of Family Business Conflict ... and how to deal with them

Family Business Mediator Audio 18. Family Systems & Skills - Decision Making.  By Jon Kenfield. Solutionist.  

• Issues with decision-making are a major cause of conflict in many business families, both in the family and in the business.  

• Charismatic business leaders can get drunk on power, which may lead to suboptimal business decisions and seriously dysfunctional family decisions.  

• A major cause of conflict lies in decisions that appear to have been made collectively, and are then unilaterally overruled. Family members and employees can lose all faith in the process.  

• Solution: provide the family and/or the business with a decision-making workshop leading to the adoption of a settled problem-solving and decision-making process.  

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50 Common Causes of Family Business Conflict ... and how to deal with them

Family Systems & Skills - Problem Solving.  By Jon Kenfield. Solutionist.  

• Some families are naturally collaborative and engaging, others rely on key decision-makers to make some or all decisions. In the first case the family will develop systems and processes for solving problems. In the second case, the family may develop high dependency on individuals to the detriment of skill development amongst the majority.  

• Lack of engagement of other family members in problem-solving is a significant cause of difficulty in succession planning.  

• Solution: Run programs teaching problem-solving to members of the family group using real issues as subject matter.  

• Engage family members in problem-solving discussions within the family (philanthropy, investment, family policies etc.).  

• Engage appropriate family members in problem solving discussions within the business.  

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50 Common Causes of Family Business Conflict ... and how to deal with them

Family Systems & Skills - Communication.  By Jon Kenfield. Solutionist.   

• It's common to blame lack of, or breakdown in, communication for causing conflict. This is total rubbish and causes enormous problems when hope, time and effort are put into fixing symptoms, rather than causes.  

• Individuals may lack the skills and insights required to recognise the different requirements of commercial vs social communications. Social communications do not require the same level of disciplined thinking and approach that commercial Communications demand.  

• Solution: Find out WHY communication has broken down (invariably relationship issues) and address those before trying to improve communication skills.  

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50 Common Causes of Family Business Conflict ... and how to deal with them

Emotional Baggage.  

• Root cause of many family business conflicts can be traced back/attributed to actual and perceived actions/inactions that created negative emotional impacts that have generated substantial emotional investment over many years to become emotional baggage that individuals carry around with them, to their detriment.  

• Solution: coaching, counselling and/or psych assistance to help diminish impact of emotional baggage, increase emotional resilience, and improve relationship engagement.  

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50 Common Causes of Family Business Conflict ... and how to deal with them

Emotional Resilience and “broken wing” syndrome - Business.  

• Emotional Resilience = coping with stress and minimising anxiety.   Epidemic.  

• Broken Wing Syndrome = parent(s) protecting weaker children.   

• Contributed to by genetics, home, school & social environments, birth order, parenting skills, domineering parent(s) and or aggressive siblings.  

• Protectionist parents exert undue and unwanted influence on business decisions,  major favouritism and organisational dysfunction.  

• Solution:  Institute a structured & objective performance management system in the business:  formalise org charts, positions and functions, roles & responsibilities & KPIs.

50 Common Causes of Family Business Conflict ... and how to deal with them

Emotional Resilience and “broken wing” syndrome - Parents & Family.  

• Emotional Resilience = coping with stress and minimising anxiety.   Epidemic.  

• Broken Wing Syndrome = parent(s) protecting weaker children.    

• Contributed to by genetics, home, school & social evironments, birth order, parenting skills, domineering parent(s) and/or aggressive siblings.  

• Parental protectionist style spills from family into business, rifts between siblings (fairness) & between parents (merit & worth).  

• Solution (2): focus on 

(a) sibling interests and 

(b) parents’ relationship with particular reference to the broken wing motivator.    Siblings:  negotiate to self-interest.  Parents:  get their thinking straight between family & business & support for appropriate help for weak child.

50 Common Causes of Family Business Conflict ... and how to deal with them

Emotional Resilience 1 - Broken Wing Syndrome- Individuals.  

• Emotional Resilience = coping with stress and minimising anxiety.   Epidemic.  

• Broken Wing Syndrome = parent(s) protecting weaker children.    

• Contributed to by genetics, home, school & social environments, birth order, parenting skills, domineering parent(s) and/or aggressive siblings.  

• Generates protectionist tendencies in family that spill into business.  Can cause major rift between parents:   “broken wing” syndrome.  

• Solution (1):  focus on the individual with the problem.  Negotiate their acceptance of the need for help and provide that help with through a specialist coach with appropriate skills.   

May need allies for this.

50 Common Causes of Family Business Conflict ... and how to deal with them

Behavioural Issues.  

• Behaviours outside the normal /acceptable bell curve create tension and disruption / dysfunction.  Family infects business & vice versa.  

• Solution:  psych assessments, coaching & mentoring.  Defined performance and behavioural expectations.

50 Common Causes of Family Business Conflict ... and how to deal with them

Relationship Interplay's.  

• Family Business continues relationship pressures present in the family into the business - very different contexts with antagonistic drivers.  

• Family hierarchy:  starts age-based, increasingly personality-based.  

• Family Business hierarchy:  starts age-based, personality-based, power-based (rather than merit-based) (family/business lifecycle).  

• Solution:   Mediation if there’s serious conflict - family history & personalities considered carefully.  HR best practice: commercial / merit-based roles, responsibilities, authorities and accountabilities.  Reporting lines. Detailed Job Descriptions for everyone.

50 Common Causes of Family Business Conflict ... and how to deal with them

Divorce & Separation.  

• Relationship failure rates over 50% -  no wonder that fear of separation has become a common justification for not transferring equity to successors.  

• Being in a family business places extra strain on marriages - parents continue to have influence over children - wouldn’t happen in outside employment. 

• Solution:  Family Constitution requires BFAs + Trust structured ownership.

50 Common Causes of Family Business Conflict ... and how to deal with them

Equal Isn't Equitable.  

• One of the most common causes of conflict:  confusing equality with equity (fairness).  

Is actually an avoidance of responsibility to think and act in ways that any outsider would consider sensible.     

• Different family members have different needs.    

• Family is about nurture & support + celebration of success. 

• More support required by more needy family members.  Not equal support.  

• Equal reward for unequal contribution / engagement also causes issues.  

• Solution:  get real in your thinking.  Help where it’s needed, but only in a balanced way that negotiates acceptance of actions with the whole family.  Be prepared to change your thinking after getting honest feedback.

50 Common Causes of Family Business Conflict ... and how to deal with them

In Laws, Outlaws & Extended, Blended Families.  

• Increasingly complicated family structures.  

• Family policy:  inclusion / exclusion?  

• Communication breakdowns.  

• Partners are loyal to their micro-family units.  

• Pillow talk and nagging disrupts agreements developed.  

• Solution:  agree family policy for inclusion / exclusion (prepare to be surprised by the willingness of younger generations to include!).    

Ensure adequate information is communicated to all significant partners so they understand the Plan, the commitments required to meet the Plan, and the likely consequences of failing to meet commitments.

50 Common Causes of Family Business Conflict ... and how to deal with them

Fossilised Leaders.   

• Living longer,  later retirement:  personal / financial / alternatives.  

• Increasing numbers of businesses led by older people 70+.  Some good, many bad.  

• Fossilised:  all faculties, more risk-averse, less agile and able to make important decisions.  No desire for change.   

• Successors frustrated.  Employees terrified about security.  

• Solution:  real needs of older leaders need to be identified and addressed, with genuine sensitivity.  Negotiated outcomes (mutual interests) essential.

50 Common Causes of Family Business Conflict ... and how to deal with them

 Unmet Expectations & Broken Promises.   

• Common cause of one-on-one conflict, family cliques.  

• One day my son/daughter, indentured slave.  

• Repressive power play?  Financial necessity? Cultural, Ethnic norm?  

• Horrible consequences:  conflict, pain & probate litigation.  

• Solution:  Family Plan:  transparent commitments.

50 Common Causes of Family Business Conflict ... and how to deal with them

Human Diversity, Ages & Stages.  

Session #2 = Psychometric Identification of Personality.  

• Personal & Family tensions through differences that can be positive or negative.  

• Family in Business Life Cycle.  

• Ages & Stages:  Age = more risk averse.  Financial security.  

• Younger family members = high cost phase of life.  

• financial tension:  safety vs investment.  

•  Solution: acknowledge and respond constructively to different needs and interests at different times.

50 Common Causes of Family Business Conflict ... and how to deal with them

The Effects of Personality Differences on Family Businesses.   

• Common threads and differences.  

• Genetics, generations, ages & stages.  

• Family hierarchy - genetic cloning.  

• Compatible, complementary or antagonistic?  

• Conflict from childhood = emotional baggage.  

• Solution:  Psychometric Identification, psych profile = behavioural preference, clues to:   “do more, do less”.