When it comes to longevity and success in family owned businesses, strategic planning and conflict management are key.

You’ve probably heard the saying “the bone is strongest where the break heals.” The same applies to relationships, and this may, in fact, give family firms a competitive edge.

Unresolved conflicts are harmful and put the family — and business — at risk. Family companies are emotional systems, and therefore more likely to face conflict. Families and businesses that have developed effective ways of managing conflict are the most likely to survive and thrive.

Several studies on marriage and families suggest that the largest number of marriages fail because of lack of conflict regulation techniques. In my work with families in business, I have observed that those who do well are those who have found ways to regulate and appreciate differences of opinion — even if potentially explosive. They enjoy a competitive advantage as they are better able to work together, trust each other, and react faster to the changing economic environment.

This also leads to better, wiser decisions. I also have found that families who are good at compromising and conflict regulation have less sibling rivalry among children.

Preventing problems

A conflict-free work environment may be a thing of our dreams, but some conflict can be avoided. Family businesses that implement these standards can prevent some conflict:

Clear, strong, meritocracy-based leadership

Family employment policies: compensation, employment, exit and entry, reviews

Formalized family meetings

Strong, effective governance with an independent board

Formalized family meetings for processing individual beliefs and creating shared understandings

Open and direct communication

Dealing with issues and conflicts as they arise in a direct, timely, and open-minded way

Realistically, however, conflict is a fact of life — in business and elsewhere. But don’t beat yourself up about it. Remember:

Conflict is normal; differences of opinion are healthy

Managed conflicts are beneficial. They:

Build self confidence in emerging leaders

Strengthen bonds

Create rich diversity

Conflict must be dealt with quickly and fairly

The process is as important as the outcome

Hard bargaining is a poor second to interest-based negotiations

Unique challenges

Families in business have much greater challenges because the stakes are very high. Relationships and assets are at risk when conflicts are not managed. The family is an emotional system that can be the glue of, but also derail, the business. Since families exist in past, present and future, in emotional time, the past is always present. Old hurts, loyalty challenges, disappointment can last a long time.

Remember, any human system is also an emotional system, with a long, complicated history working in emotional time. In any emotional system, a fair and timely process offers safety and predictability. Make sure to:

Establish a fair process

Build in safety and predictability so individuals will know what to expect

Get buy-in from parties

Use it!

A fair process

Ground Rules

Here are steps to follow in managing any conflict:
• Initial positions
• Statement of problem
• Statement of each parties position

Interests
• What are the concerns of each party?
• What are the individual motivations?

Create solutions
• Think out of the box
• Invent options
• Brainstorm

Get objective criteria for each option
• What is the industry standard?
• What are the requirements for that position?
• How do we review that investment strategy?

Reach/craft an agreement
• Have an open discussion of the choices
• Weigh options
• Combine elements, if possible
• Make a decision

Armed with an efficient process, family businesses can turn conflicts into learning opportunities. Through conflict management, families can strengthen their existing bonds to the benefit of the business, and more importantly, the family unit.