Conflict is an inevitable part of any business. If well-managed, conflict enables businesses to build on differing points of view represented by the collective knowledge, experience, and insights of all parties. The goal is to achieve constructive outcomes based on informed, effective and supported decisions.

If poorly managed, conflict quickly deteriorates into emotional defense mechanisms and retaliatory behaviors causing a downward cycle of mistrust, disrespect, poor relationships and destructive outcomes.

Family businesses encompass all of the potential for constructive or destructive outcomes involving conflict with the added complexity of introducing family relationships and long-held, negative emotions into the work setting.

The following outline summarizes common sources of dysfunctional family conflict and briefly lists recommendations. The first and most important action is to be honest in recognizing if any of these problems exist and commit to making changes in how the business operates to resolve them.

Five Common Sources of Family Conflict

1. Sibling and other family rivalry and childhood roles. These follow people into adulthood. Such complex family (including spousal) relationships can adversely impact business results.

   Recommendation: Help people learn to talk openly about such issues and take responsibility to treat each other with respect as adults. This includes developing boundaries and learning methods of separating family relationships from business roles and decision making.

2. Succession planning. Who gets what type and amount of equity, benefit, title, or role can be major sources of explicit conflict or implicit but destructive behaviors.

   Recommendation: Develop clear criteria about standards of required participation in the business and objective measures of competence and successful work performance that determine how to allocate roles, ownership, and other business benefits to family members.

3. The pursuit of power, status or unearned entitlement. These can be toxic causes of succession conflicts (see above) and also cause disputes in on-going family business relationships. Viktor Frankl wrote about the deleterious effects of a self-serving will-to-power and a superficial will-to-pleasure that applies to our lives and our businesses.

   Recommendation: The alternative is to develop inspiring, unifying, and productive family and business values that promote meaningful, fulfilling lives and work outcomes.

   Examples include demonstrating integrity in relationships and decision-making, stewardship for the best interests of the business, accountability for performance, and respect for the dignity of all people. The objective would be for family members to consistently and genuinely exhibit such values to earn ownership, executive or managerial roles, responsibility and authority.

4. Playing by Different Rules. This is similar to the problems caused by playing favorites in non-family businesses. The problem often presents itself as a form of elitism or entitlement that exists simply by virtue of being in a family that owns a business.

   Examples show up in allowing one or more family members to exhibit deficient standards of conduct or performance that violate sound business practices or important requirements that all other employees are expected to follow. Such behaviors can be divisive and demoralizing to all employees and customers as well as harmful to the reputation of the business.

   Recommendation: Require family business members to serve as role models for expected standards of performance and conduct that demonstrate the importance of such requirements. Link effectiveness in these areas to the commensurate level of business responsibility and benefits earned by the family-business member. The goal is to serve as exemplars of business ethics and performance that help to attract, retain, and motivate non-family business members who are often prime sources of intellectual capital and added-value required for enduring business success.

5. Competing perspectives about business strategy. Such differences can create fear, anger, and destructive attempts to control decisions that are divisive and counter-productive to making and implementing sound decisions.

   Recommendation: Develop a strategic formulation and implementation process that poses best-practice strategic questions, develops sound criteria, objectively investigates facts and assumptions, facilitates full discussion and analysis, and promotes effective decision-making and implementation.

The above examples of family-business conflicts are not intended to be an exhaustive list but represent some of the most common challenges causing conflict in family businesses. These common sources of conflict can be significantly addressed by developing clear and effective communication skills, meaningful core values, consistent performance criteria, expected standards of leadership behavior, and effective decision-making processes.