A family business can be a great thing. Aside from the income it can provide to family members–I’m including extended family in this discussion–it can allow them to participate together in some way in an income-generating enterprise. That could range from actually working side-by-side, to just being co-owners in a business, or any point along that spectrum of participation. And after one generation of a family has built up a business, they can get great satisfaction from passing it on to the next generations. Many family businesses have been very successful, not only financially but also in the intangible ways of generating and preserving family bonds and traditions.
But along with the possibility of happy success comes the potential for problems and conflict. Family businesses are subject not only to the normal business problems and conflicts, but also to the vast array of possible problems and conflicts that can arise in families. The mutual love and care that exists in many families can sometimes be the source of a good solution for conflicts as they arise in the business. But there are often other motivating forces in families, and extended family, aside from love and care. I won’t try listing them here, but just take a moment to think about it and I’m sure you’ll come up with many. Those forces can generate problems in a family business, and can make it harder to resolve the conflicts that arise in that business.
Family issues can make it more difficult to organize a business in the most effective way. Family members who are co-owners of a business can have very different motivations for business decisions that need to be made—because of different circumstances or different personal values and character found in different parts of the family. And family member employees can sometimes feel less accountable for the normal expectations of employees–because they are family.
The possibilities for conflict among family members involved in business together are almost endless. Many of those conflicts are things that a good business advisor or counselor can help resolve. But sometimes family business conflicts involve substantial legal issues and the parties seek help from their lawyers. Conflicts involving legal issues could be:
- a failure to abide by requirements in the governing documents of the business
- using company property or information or business relationships improperly
- using the person’s position in the company for self-dealing
- an attempt to acquire control to the exclusion of some other family members
- or a wide range of other things that damage the company or hurt other family members involved in the business.
One of the keys to resolving any conflict is to understand the roots of the conflict. And, like the roots of a tree, the roots of a conflict are often not visible on the surface of things. When a conflict in a family business has its roots in a conflict in the family, that conflict might have a history going back decades. And it could involve deep-seated emotional or psychological factors. So what might look to an outside observer like a logical resolution, based on the law and the facts of the business, could be a complete non-starter for one or more of the family members involved. Because, to them, it’s not just a business conflict or just a legal dispute.
It can be a challenging process for those involved in trying to help resolve the dispute. I’ve had a number of opportunities over the years to help find a resolution for family business conflicts. It takes time. It takes effort to dig under the surface of things. It takes a willingness to really listen to and treat an adverse party with respect. And it usually takes patience.
Sometimes, despite those efforts, it has taken a court to resolve the conflict in a family business. But a resolution can often be found that doesn’t require a judge or jury. And there’s a lot to be said for that when a family business is involved!
Are you experiencing challenges like these with a family business? Do you know someone who is?