There have been many the-ories as to the complex nature of how conf licts begin and whether disputes can lead to change and create progress, but what is unequivocal is the pre-dictable nature of conf lict and its long lasting consequences. In the family business, and consequently the family office world, disagree-ments are commonplace, yet fami-lies are poorly tooled to resolve such conf licts, let alone understand why they exist in the first place.
Families are a group of people bound together by love, lineage, law, and often a little luck. They often disagree with each other and carry a certain amount of ‘baggage’, the ori-gins of which have been laid down from previous generations. They also tend to have affection for spouses, parents, siblings, cousins, aunts and uncles, grandparents, and grandchil-dren. When families are engaged in running a business these positives and negative aspects of family inter-connectedness are exposed and ten-sions can emerge.
One of the challenges for family businesses is to channel the bonds of family in a positive way to gain a com-petitive advantage. Anyone running a business knows how challenging it can be and accepts there will be dif-ferences within the workforce at all levels. However, when the conflict is between members of a family, the emotional impact is heightened and any negative outcome can be poten-tially destructive to the whole family, including those unborn future gen-erations. We must accept the con-flict is a fact in family business life but we can learn to harness its crea-tivity rather than allowing its nega-tive potential to be at the fore.
The nature of family conflict has a different dynamic to non-family conflict. Family members have more invested in the on-going relationship and the result may be a stronger reac-tion to conflict. When they disagree they may sever contact and eventu-ally decide they are too emotionally far away to work towards any kind of reconciliation. Once the dust has settled and there has been a passage of time to reconsider, they may move to seek a closer relationship but then realise they are too close and vulner-able to further hurt and disappoint-ment so their relationship can often exhibit circular patterns.
The Family Firm Institute states that 20% of family businesses report weekly conflict, another 20% report monthly conf lict and 42% report conflict three to four times per year; although not all disagreements rise to the level of seemingly intractable conf lict. When two or more indi-viduals must act upon or implement their needs, values, or interests, and they perceive others are blocking or opposing them, conf lict arises. Too often, families sweep poten-tial conflict under the rug. Rather than respectfully addressing prob-lems that could cause strife, they are ignored and allowed to fester until some combination of events makes them impossible to overlook. By then the conflict may be so intense and deep-rooted, or the business may be in such a delicate and precarious position, that resolution is much more difficult.
The ultimate price to pay for fam-ilies could be financial ruin, hatred of other family members and with it misery, depression and a great deal of suffering. When it comes to conflicts of interest in family busi-nesses, matters are more difficult to resolve because there are three levels of interests at play: family, business and ownership.
Rather than mask or deny inevi-table conf lict, resolution brings deeply held differences to the surface and creates a comfortable space and set of skills to successfully move for-ward while enhancing the relation-ships involved.
Avoiding conflict
It is optimal to avoid negative con-f lict if at all possible and there are steps that can be taken to minimise damaging conflict situations.
1\. Know yourself
When dealing with conf lict, family members should pay close atten-tion to their own state of mind and emotions. We all respond differ-ently to conf lict and our responses are not generally logical. If we know what triggers our own con-f lict we can then take control of how we wish to behave.
Conflict is rarely logical or factual but comes from a perceived threat. This threat could be physical, emo-tional, psychological or fiscal. When we feel angry or threatened by a chal-lenging conversation or situation we may experience what is termed ‘an amygdala hijack. where our emotions take precedence over logic. When this happens a number of physical changes take place – the emotional part of the brain, the amygdala, over-rides the thinking part of the brain – the neocortex, in response to a per-ceived threat. This compromises the ability to reason and think logically. The working memory becomes less efficient and blood pressure, adren-aline and hormone levels rise. It can take up to three to four hours for it to clear the system.
People respond differently to this flood of hormones. Generally, we prepare ourselves to deal with the perceived threat by either run-ning away or standing our ground and fighting. This ‘fight or f light response’ has evolved over many thousands of years.
A stressed person may be prone to impulsive thinking and behaviour they may regret later. It is important you understand your own response to conflict. Ask yourself:
Do I enjoy it?
Do I provoke it?
Do I fear it?
Do I go numb in the face of it? Do I run from it?
Do I ignore it?
Do I tolerate it?
Then consider how it will affect your response to the situation you are in and that it is highly likely the person you are in dispute with will have a very different response.
2\. Listening
The key skill in both avoiding and resolving conf lict is listening. Always give the person the opportu-nity to explain. Sometimes we learn very important things by giving others the space to talk. We all tend to take for granted we know how to listen but this is often not the case and some training in active lis-tening can help reduce conflict.
When we listen actively, we are not just listening for the facts of the situation but we are listening to the impact those facts have had on the individual’s experience and there-fore their understanding of the con-f lict. We must remember conf licts are not about facts - they are about perceptions. People often move into conflict when they feel their values are being threatened. In family busi-nesses and family offices, it is often assumed values are shared and it may feel very unsettling to discover this is not the case.
When we are listening, we have to be aware of the values, beliefs and behaviours which underpin the individual’s perception of the con-flict. In order to feel heard a person needs some feedback from the lis-tener. This can be non-verbal – nods, body language, eye contact etc., or verbal – reflecting back key words of the speaker, paraphrasing the content in the listener’s words and summarising the main themes, con-cerns, values and emotions which are expressed. The listener must firstly hear, acknowledge and accept, rather than challenge, what is being said. Once someone has been truly heard, they are more open to challenges and the possibility of genuine progress is possible and likely.
3\. Communication
Open and honest communica-tion can help to avoid many of the misunderstandings that can lead to conf lict. There is a widely used method to resolve common conflict, which builds on the importance of good communication. It is known by the acronym DESC, which stands for “Describe, Express, Specify, and Consequences.”
Let’s look at a fairly common sce-nario and how you can apply DESC:
A family business member has consistently been arriving late to meetings. Other family members are annoyed with the behaviour, team-work is deteriorating and impor-tant decisions are being delayed. As the leader of the business, you are expected to do something about it. In fact, given what you know about the risk of delaying resolution, you really want to do something about it and move on. How can you best correct the situation?
Describe. In a private meeting with the individual, listen respectfully to how the person perceives the situation and then describe your own percep-tion of their actions. Try to quantify the concerns, and avoid being judg-mental and do not use absolute terms such as: “You always…” and “You are never…” Instead say something like: “You were 30 minutes late to yester-day’s meeting. That was the fifth time this year.”
Express. Express your con-cern about the consequences of the behaviour on the business and family and on how other family members perceive the individual. Do not be overly dramatic. Keep it simple and believable.
Don’t say: “You are destroying the company.” Instead, say: “The problem with you coming in late is that it reduces the amount of time we can spend on important decisions, and it conveys to other board mem-bers the message the meetings aren’t important to you.”
Specify. Be clear about what is needed. Specify the behaviour required for the problem to be resolved. For example: “We need your input and so it is vital you be here on time when we call a family board meeting.”
tive and positive consequences that will occur when the behaviour is changed. For example: “When you show up on time, we will get through the meeting on time, resulting in a more productive teambuilding and morale-enhancing experience.
“We will benefit from your expe-rience. If you continue to be late, people will believe it’s not important enough for them to be there, or that they’re only there because they have to be.”
Common conflicts
Those of us who work in the field of conflict resolution often seen the same themes occurring in family businesses:
\- The child who has no interest in the family business and wishes to pursue a different career path.
\- Siblings where one has taken over a leadership role and the other is critical of everything they do
\- Family members' jealousy over who is perceived as gaining most from the business.
\- Clash of how the older generation have conducted business successfully pitted against the new ideas of the next generation
\- Views about the effectiveness and parity of women in the business.
These are often caused by a mis-understanding of motives and values underlying the behaviours of the individuals involved.
External intervention
Even the healthiest, most loving families can get stuck in a dispute and even the most adept, caring family members can get caught in the middle.
An external consultant or medi-ator may be needed to help.
Often families are reluctant to ‘wash their dirty linen in public’ but confidential, expert intervention at an early stage can avoid the neces-sity for very public and sometimes vindictive court cases, which often result in total family breakdown.
Many family business conf licts benefit from the involvement of an external mediator. Today, media-tion is regarded as a form of ‘alter-native dispute resolution’ through which a neutral third party assists those in dispute to work towards their own settlement. It is a quick process, often taking place in one day and is also a great deal cheaper than legal alternatives. Unlike court proceedings mediation offers confidentiality, the only excep-tions usually involve child abuse or actual or threatened criminal, vio-lent or dangerous acts.
Mediation aims for a solution that is ‘good enough,’ with both parties feeling they have benefited and even learnt from the process rather than one party feeling they have ‘won’ and the other ‘lost’.
The structure of mediation can vary. On the day of the mediation, the mediator starts by seeing all par-ties together to reiterate the ground rules, clarifying the mediator’s role, explaining how the day will work and then moving on to hear opening statements from all concerned.
The parties then adjourn to their own rooms and throughout the day the mediator will meet with each party separately and confiden-tially until there seems to be some common ground when the medi-ator will usually bring the parties together. Finally a written agreement is drawn up and signed by the parties and witnessed by the mediator.
However, there is much more to mediation than following a process. The key work of the mediator is to understand the parties in dispute, what is important to them and what might enable them to move on.
Family businesses are increas-ingly recognising the danger of con-flict to themselves as individuals, to the family relationships and to the success of the business. Increasingly they are turning to mediation as a way forward.
Overall mediations are shown to have an 85% success rate. They are cheap, and for family businesses the confidentiality is also a great benefit over the much more public route of court proceedings.
