By Alfredo De Massis, left, and Emanuela Rondi, right
Family businesses are an essential part of the global economy, blending the strengths of shared purpose, long-term focus, and deep personal commitment. However, these advantages also create a unique context where personal relationships and professional responsibilities often intersect, making conflict inevitable. Managing these conflicts effectively is crucial for the success of the business and for preserving family harmony. Understanding the nature of conflicts and embracing their potential for positive outcomes can transform challenges into opportunities for growth. In this article, we distil key insights and analyse conflicts in family businesses, identify four types—relationship, process, succession, and cognitive conflict—and outline strategies to address each.
Understanding the Types of Conflict
Conflicts in family businesses can generally be categorized into four main types: relational, task, succession, and process conflicts. Each has unique characteristics and implications for the family and the business.
Relationship conflicts stem from personal dynamics and emotional tensions among family members. These often arise from unresolved personal disputes, personality clashes, or communication breakdowns. For example, siblings working together may experience rivalry or resentment rooted in their personal histories, which can affect their ability to collaborate professionally.
Process conflicts relate to how work is conducted or decisions are made. These may involve disputes about authority, workflows, or governance structures. For example, disagreements about who has the final say on strategic decisions or how meetings should be run can escalate into significant issues if left unresolved.
Succession conflicts emerge during leadership or ownership transitions. They are common in family businesses as questions of fairness, readiness, and alignment with the business’s future vision often lead to disagreements. For instance, unclear succession plans or perceived favoritism can ignite long-term disputes that strain both the business and family relationships.
Cognitive conflicts involve disagreements about the content of tasks being performed. This type of conflict involves differences in viewpoints, ideas and opinions among individuals and focuses on divergent thoughts and perspectives regarding the work at hand. These conflicts might arise, for instance, when family members have different ideas about whether to focus on expansion, innovation, or cost-cutting measures. While it can be a source of tension, cognitive conflicts also have the potential to foster creativity and innovation if managed constructively.
Root Causes of Conflict
The overlap of personal and professional dynamics in family businesses is a primary source of conflict. Role ambiguity, where family members struggle to separate their responsibilities as relatives from their roles as employees or owners, is a common issue. Generational differences add another layer of complexity, with older members often emphasizing tradition and stability while younger generations prioritize innovation and change.
Disparities in contribution or compensation can also lead to resentment. Family members may feel undervalued or overburdened, especially if their efforts are not equitably recognized. Succession planning, one of the most sensitive processes in family businesses, often triggers conflict when it lacks transparency or inclusivity. Additionally, unresolved personal disputes, such as those related to inheritance or familial tensions, can spill into professional interactions, exacerbating disagreements.
Strategies for Resolving Conflict
Effectively navigating conflict requires a proactive and structured approach tailored to the type of conflict at hand. For relational conflicts, fostering open communication is essential. Regular family meetings create a safe space for airing grievances and finding resolutions. Professional mediation or counselling can be invaluable when emotions run high, helping family members to understand each other’s perspectives and build stronger relationships. In cognitive conflicts, encouraging diverse perspectives can turn disagreements into opportunities for growth. When family members feel heard and valued, cognitive conflicts can be an opportunity to share different perspectives. Revisiting the family’s shared vision and long-term goals often helps reframe disagreements as opportunities to align on the business’s priorities. Succession conflicts benefit from early and transparent planning. Process conflicts can often be addressed by formalizing workflows and governance structures. Establishing clear guidelines about decision-making authority, meeting protocols, and resource allocation prevents misunderstandings and promotes accountability. External advisors can help families design these structures and ensure their implementation is fair and effective.
Promoting emotional intelligence across the family can also be transformative. Encouraging self-awareness, empathy, and active listening helps family members navigate disagreements with greater understanding and respect. Workshops or training sessions focused on conflict resolution skills can equip families to handle challenges more constructively.
Leveraging Conflict for Growth
While conflict is often seen as a problem to be avoided, the key to navigating it lies in recognizing its potential as a catalyst for growth. Conflict offers a unique opportunity to share ideas, improve communication, and strengthen relationships. It forces families to address underlying issues, challenge assumptions, and explore diverse perspectives, which can lead to better decisions and a more robust business. By embracing conflict rather than avoiding it, family businesses can foster an environment of trust and collaboration. Ultimately, as our research clearly shows, it is not the absence of conflict but the ability to manage and leverage it effectively that determines the resilience and success of a family business.
Conclusion
The key concept in managing conflict in family businesses is not to shy away from it but to harness its potential for positive outcomes. Conflict, when approached with openness and a willingness to collaborate, becomes a powerful tool for growth. It enables families to share ideas, communicate more effectively, and align on their shared vision for the business. By adopting strategies that address the root causes of conflict and leveraging disagreements as opportunities for improvement, family businesses can thrive both as enterprises and as cohesive, supportive entrepreneurial families.
Alfredo De Massis and Emanuela Rondi are authors of The Family Business Book: A roadmap for entrepreneurial families to prosper across generations out now, published by FT Publishing
