A Systematic Approach to Understanding Family Conflict - Doug Baumoel

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All business’ experience conflict, it is inevitable. Conflict in business can be extremely stressful and have an impact on the success of the business, but when it is a family business, the stakes are much higher. Family members in a business together tend to take their jobs very seriously and personally, therefore, conflict about the business can often lead to feelings of personal attacks. In order to take hold of a conflict and deescalate the situation, it is important to first understand the origins of conflict from a systematic approach.

I reviewed this systematic approach on conflict comprehension to provide familial business’ with a first step in identifying, managing and overcoming their issues:

Conflict is complicated

“Conflict in a family enterprise is often multilateral in nature and built into the overlapping systems that make up the enterprise (ownership, business, governance and family). Attempts at individual dispute resolution rarely have more than a temporary impact and can actually make matters worse. Simply applying a ‘best practice’ to the individual systems often fails to produce long-lasting outcomes.

“Managing conflict in a family enterprise is particularly challenging because of the importance of the family relationships. Unlike civil disputes, in which the parties may battle and then walk away, enterprising families remain connected. Therefore, it is important to consider how the conflict will be managed, the impact of the settlement on the parties’ relationships going forward and how the other interconnected relationships will be affected.

“A systems approach to managing family enterprise conflict may be understood best by breaking conflict down into its component parts:

Historical impasse:

“Families who work or own assets together bring their history with them into the enterprise. Often these histories are difficult — containing past hurts, betrayals and compromised trust buried under the happier experiences they would prefer to remember. As the dynamics of business challenge the family relationships, old feelings surface and give rise to active grudges and distrust.

Incompatible values:

“Families breed a variety of personality types, each with their own talents, skills and values. Such divergent values may give rise to conflict when the stakeholders rely on each other in a business or shared wealth setting.

“Differences in risk tolerance, frugality and work ethic as well as issues around substance abuse, personal ethics and even personality clash may lead to untenable working relationships and conflicting visions for the enterprise.

“Or, simply put, family members may not like or respect each other (or each other’s spouses), but are forced by circumstances to work and own assets together.

Opposing goals:

“Whether driven by different values, facts or needs, stakeholders’ visions for the enterprise may not always be aligned. As a result, decision making can become stalled, or worse.

The trigger:

“Some families may have all the ingredients that underlie conflict but seek to avoid it at all costs. They remain stuck and unable to make timely decisions, potentially bringing about devastating effects on the business, the estate plan and the family. Active conflict, however, requires a trigger. For example, when a stake-holder exerts power in a manner perceived by others as arbitrary, without moral or legitimate authority, lacking factual basis or with malicious intent, active conflict is triggered.”

About Doug Baumoel: Doug is a founding partner at Continuity Family Business Consulting. Having grown up in a family business himself, he is a family enterprise and governance expert. His firm works to manage familial conflicts, and to develop and implement strategies to ensure the success of shared family enterprises while enhancing the important continuing relationships that are at stake. He is a trusted adviser and author, as he co-authored the book ‘Deconstructing Conflict: Understanding Family Business, Shared Wealth, and Power’. In his free time, Doug enjoys playing the guitar.

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!mpact Magazine is a platform where people with a vision can share their ideas and insights.