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Managing Conflict in a Family Business

family owned business dynamics

Family businesses in the U.S. make up 64 percent of the country’s gross domestic product. In other words, family businesses have a big impact on our economy. Family-owned businesses also create 78 percent of all new jobs. Yet, 60 percent of family-owned businesses have communication issues and 47 percent of those retiring have not selected a successor.
There’s no such thing as a family business without conflict, and these conflicts should be taken seriously. The fundamental question is, how do you deal with these quarrels so that they don’t cause lasting damage to the family or the business?

We turn to the advice of Mitzi Perdue, author of How to Make Your Family Business Last.

1. Don’t move disagreements outside the family.

The experience of many thousands of family businesses shows that once a family starts down the road of a public dispute or litigation, the result is often the end of the family business. Members of business families need to realize the possible consequences.

2. Let family members know it’s not just about their wishes.

Because any public acrimony in a family business often leads to the company’s failing, it threatens the well-being of innocent bystanders including the company’s employees, stockholders, lenders and even the tax base of the community. Members of family businesses should know they have a responsibility to a large number of people beyond themselves.

3. Emphasize the concept of “Family First.”

Family businesses are unlike regular families because in the tug of war between individualism and being a member of the group, there needs to be a different balance. Members of a family business have a different level of responsibility because their actions influence all the stakeholders involved with the business.

4. Put relationships ahead of ego.

Members of family businesses need to know there are times when they have a choice between getting their way and having a relationship. Being a member of a family business can mean sacrifice, and for the business to continue, this can mean giving up the ego gratification of getting their way. However, in return they’ll get something of vastly greater importance—the chance for the family legacy to continue and thrive.

5. Compromise is key.

Members of a family business should learn to listen to each other and avoid the temptation to “stand on principle.” In the context of a family business, “standing on principle” means, “I’m not going to listen to you.” It also tends to shut down the give and take that’s essential for compromise.

6. Be careful of what is said in anger.

Angry words can be self-fulfilling—for example, disparaging someone’s competence or expressing preference for a sibling. A person may say something in momentary anger, but the person hearing what was said may remember those words for a lifetime.

By considering and practicing these six techniques, you can avoid family business dissent before it jeopardizes the health of the company as a whole.

Mitzi Perdue is a celebrated speaker, businesswoman, and author of How to Make Your Family Business Last.

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