Tips to Avoid Conflict When Running A Family Business

Posted on: 30 July 2015


Family run businesses make up 70 per cent of all businesses in Australia. There many practical reasons for going into business with family members, with some of the most well known businesses operated by multiple generations in the same family. But despite the benefits, smooth sailing can be often difficult when keeping things in the family, which can then lead to emotional conflict as well as other issues. To avoid conflict getting out of hand, and to ensure family relationships remain in tact, these tips should be considered when working in a business with family members.

Schedule Regular Meetings

With any relationship, but especially with families where it may be more difficult to raise issues, it's important the lines of communication remain open. Scheduling regular meetings in a formal setting is recommended rather than a quick chat over dinner or drinks. Meetings will help to ensure that any issues are raised early rather than being avoided and left to worsen or escalate.  Even if they are going to be difficult conversations, these need to be had, and usually the sooner the better. Fostering a culture of open dialogue will set the business off on the right foot from the outset.

Implement and Agree on Contracts

Family businesses should still operate under formal business arrangements, with major decisions made by consensus and under contracts, which means all decisions, terms, conditions and other agreements should be put into writing. Keeping records of these and a paper trail of operations will give substance to decision making, ensure clarity and help to avoid things being left open to interpretation, which can be the cause of conflict later down the path.

Make Sure Everyone Understands Their Role

Even in a family business where responsibility is shared, there needs to be one primary decision-maker responsible for the majority of day-to-day decision making. Just like non-family businesses, it's important that people working in the business understand the boss/employee relationship and recognise the need for some form of hierarchy or chain of command. Role recognition is essential so everyone understands what they are responsible for and there is no overlapping or confusion with roles. If this is established from the beginning, it will avoid role-related conflict and issues relating to authority.

Establish Boundaries Between Work and Family

This may include implementing a rule when discussion of the business can be raised and rules relating to balancing work duties outside of regular business hours. Especially for husband and wife teams, this can be especially important to avoid the business taking a toll on the marriage and interfering with personal time and relationships.

Consider an External Board or Mediator

To help move forward with impasses, conflicts or differences of opinion between family members, it can be worthwhile to gain the expertise of people external to the business. This doesn't always have to be as formal as creating a board; however, an established board can be a proven way for larger businesses to make decisions and plan their future success. Another option may be to establish an advisory council with business consultants. In this team may be a mediator who can help mitigate any conflict or tensions within the business so stakeholders can move forward successfully.

Bringing in consultants from a company like Control Your Business could also be beneficial if there is concern over how familial relationships are affecting the business.

While family businesses do have their advantages, it's important a strict framework of rules and expectations are agreed upon and established to ensure the smoothest operation of the business as possible. This will also ensure the most harmonious relationship between family members and over time will translate into the overall health of the business.