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How to manage conflict in the family business

What is conflict? According to just one of many definitions, it is "an expressed struggle between at least two interdependent parties who perceive incompatible goals, scarce resources and interference from others in achieving their goals," writes Walid Chiniara.

Conflict is perhaps one of the most consistent elements of life and although it takes many shapes, its roots are often strikingly similar. If conflict were a tree, its roots would be perception, mistrust, suspicion, ego and identity as there are few conflicts that do not include at least one, if not all, of these components.

Conflicts in family business are one of the primary reasons why the status of family firms remains vulnerable. For family businesses, conflicts in the business are inevitably personal – which makes them ever more difficult to solve. This becomes clearer if we consider the roots of conflict in turn.

Perception includes, inter alia, a perceived injustice caused by the perceived "free riding" of others or unfairness in the treatment of others. We see this in a family business context often. It could be that one individual believes that he or she does more work than, for example, their brother or sister who receive the same reward. There are a very limited number of ways to deal with this issue in the eyes of the perceiver.

We have seen examples where the eldest sibling in charge has cut off the substantial monthly allowance of his siblings in order to get them to turn up to work! Free riders, however, generally have their own perceptions of what they are obliged to do – they may not see themselves as free riders at all. 

In this example the siblings did not show up to work because they felt patronised and undermined by the eldest brother and thus simply gave up. It wasn't until the elder sibling took an impromptu leave of absence (triggered by mounting conflict) that the previously perceived "free riders" proved their worth.

Mistrust and suspicion are both linked to perception. Often we see business founders in their 80s who continue to retain the position of chairman. Potential successors often believe that they are not trusted fully enough by the founder to take over completely and this breeds much contempt.

Feeling mistrusted can be emotionally scarring, particularly if the founder is a parent. It leads those who believe that they are the obvious successor to be suspicious of anyone else perceived to be "blocking the entry gate" or "getting too close". Once again, in a family business context, these emotions lead to conflict as siblings or cousins accuse their peers of compromising businesses interests in the pursuit of their own goals and ambitions.

The idea that one is being diminished or damaged, mistrusted or misunderstood, wounded or threatened has a massive impact on ego. Whereas confidence is linked to competence, ego is linked to control. This is particularly destructive in conflict resolution as both components are usually inflexible and inward focused.

Identity is a psychological need. The identity and ego components can be the most fatal because fundamentally all individuals need to feel valued. Any indication that they are being weakened or injured, or that their position is under threat, will nearly always cause an upsurge of emotion and protest. Moreover, identity can never be replaced with money. If that were the case then some of the biggest family feuds would never have erupted.

Consider the widely publicised Ambani family feud. Both brothers felt that it was their right to take control of the family empire upon the death of the father. The father, however, had never chosen his successor. When the elder brother took over, the younger brother suddenly became his subordinate, which had never been the case previously. This eventually resulted in the carving up of the business empire among the brothers, against their father's wishes.

No amount of money (of which there was an abundance) could ever have convinced either brother that he was less worthy of the position that the other. That is inherently a force of identity.

With conflict having such entwined and complex roots, the issue of conflict resolution can often seem impossible. This is amplified in a family setting because there is so much at stake. There is no one method that can be recommended – solutions usually come from a mixture of negotiation, mediation, diplomacy and communication. 

Of course, sometimes solutions are simply not to be found. There are many cases of stalemate that have ultimately brought down a family's legacy for good. If, however, families do choose to embark on or establish mechanisms for conflict resolution, then facilitators of this process must ensure that the following ethics underline the process: 

Principled negotiation: in finding solutions one must attempt to separate people from problems. Negotiators are people first and as mentioned already, every party in the negotiations is going to carry with it emotions and ego. The relationship between the parties must play a role, as the outcome will most certainly affect this relationship if it is not given due consideration.

Focus on interests not positions: understanding perceptions means coming up with better solutions.

Create solutions for mutual gain: insist that results are based on mutual criteria.

On a final note, it is worth taking the stance that not all conflict is destructive. Conflict can lead to positive changes for the common good. If a family has a planned mechanism for dealing with conflict then there is always the possibility that conflict can turn into opportunity.

Walid Chiniara will be speaking at the Family Business Conference in Doha, Qatar, on 16-17 May 2010. Visit for more information.

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