The Case for Conflict in Family Businesses

The Case for Conflict in Family Businesses

"It was the best of times, it was the worst of times..." Dickens iconic introduction to A Tale of Two Cities frequently resonates in family businesses. Most business leaders confront the best and worst of times, and how both ends of the spectrum are dealt with often determines success or failure. In family businesses, conflict is taken up several notches, and that conflict can destroy personal and professional relationships. That's one of the reasons most family businesses do not survive to the third generation.

Josh Baron teaches a class in family business conflict at Columbia Business School. He relates to his students that both too much and too little conflict have equally adverse effects on a family resulting in limited growth, poor decision making, competitive disadvantages and in the worst case the sale, split or demise of the company. 

Baron advises considering conflict in a family business as having an internal and external face. The external face represents too much conflict evidenced by emotional outbursts. The internal face represents too little conflict represented by emotions seething beneath the surface. "An iceberg of emotions where the surface is pleasant enough but the danger lies beneath," writes Baron. Internal conflict is more often the case in family businesses because family to most people is most important. Family members want to celebrate holidays, weddings, milestones together. The desire to protect those relationships can result in sowing the seeds of destruction down the road, claims Rosen.

There is a healthy middle between the two extremes that enables family members to discuss difficult issues and resolve them without causing irreparable damage to family and business relationships. Rosen offers a roadmap to find a happy medium. He suggests answering the following three questions:

  • Are we better together than apart, and are you satisfied with the general direction of the business?
  • Is there an elephant in the room that no one is talking about? Are critical issues being discussed and acted upon?
  • Are we aligned on the big issues, and can we enjoy each other's company most of the time?

Baron uses Sierra Nevada beer as an example of reaching a happy medium. The company brands its family relationship on the can with the following: FAMILY OWNED, OPERATED & ARGUED OVER. 

Baron's point is that most people want to avoid conflict, especially so in a family business. However, some conflict is healthy because it provides opportunities to clear the air, discuss the issues and problems that need to be addressed and develop solutions that are in the best interests of everyone.

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