50 Common Causes of Family Business Conflict ... and how to deal with them Jon Kenfield

50 Common Causes of Family Business Conflict and how to deal with them.  

Family Business Mediation Video No 50.  Cuckoo Consultants.   

By Jon Kenfield. Family Business Mediator. Solutionist.  

• This video is unique amongst the 50 in this series in that it looks to an entirely external conflict generator that can act upon the family - as opposed to the other 49 causes, where the family does its own great job of creating its very own conflict.  

• Cuckoo consultants come into family business environments, usually from a business background, sporting business-based credentials and perspectives.  They create confusion and conflict by promoting perfectly appropriate business advice to the wrong people, in the wrong way.    

• They sound sensible, logical and commercial, but their advice is completely unworkable.   

• The problem lies in their ignorance of the unique requirements of family business - much as a cuckoo has no concern for the eggs it turfs out of a host nest to make space for its own egg.    

• Cuckoos can be existing trusted advisers, keen to protect their clients from outside consultants (the flea wishes to own the dog); consultants from HR or “normal” business backgrounds who believe they have the required experience and skills; advisers who don’t know what they don’t know; or ones who just don’t care.  

Solution  

• Approach all adviser engagements as life or death projects - because they could be, for your family and for your business.       

• Check every proposed adviser’s family business advisory credentials, including training, experience and, most importantly, real testimonials and referees.  

• Don’t rely on accreditation alone.  Real knowledge and experience, and demonstrable skills, are far more important.  

• Meet them, ask questions and judge their answers.  

• Importantly, as with all adviser engagements, assess them for the quality of the questions they ask you.  Any adviser that proposes or recommends doing anything before they have a reasonable understanding of your needs is a salesperson, first and foremost.  In all probability, that’s not the key skill you’re looking for.  

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50 Common Causes of Family Business Conflict and how to deal with them.  

Family Business Mediation Video No 49.  Non - Family Conflict Causes.  

By Jon Kenfield. Solutionist.  

• Can non-family people create conflicts within the family business?  You bet!  

• Family Business are notorious for creating cliques (read your Shakespeare!):  supporters for Mum vs Dad; for siblings against other siblings; for one generation against another; and for getting all family out of the business - so it can be run properly!   

• Motivations may be pure, or not, and may be driven by the best interests of the business, or not.  It depends.    

• Most employees and advisers have their loyalties tested when family businesses reach certain tipping points, and something major has to happen.  Employees, at all levels, are obliged to consider their own, and their families’ situations and futures, while advisers can be conflicted into supporting the person who pays their bills.  Is that now, or longer term?  Who knows?    

Solution  

• To prevent individuals getting behind family members and creating / broadening conflict, the family needs to be able to present a united front about where things are going, and with whom.  This requires a Plan.  

• The Plan needs to reassure everyone that the family’s focus is on the future of the business, not on who may lead the business.   

• The family also needs to make clear to everyone that it doesn’t welcome partisan support for individuals against others.   

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50 Common Causes of Family Business Conflict ... and how to deal with them.  

Family Business Mediation Video 48. Old Retainers.   

By Jon Kenfield. Family Business Mediator. 

 • Old retainers area a common cause of conflict in family businesses where Mum or Dad has worked with “old Phyllis / Sam” since the early days and has made promises that “we’ll always look after you”. The new business leaders are being made to feel obliged to honour these promises.  

• Problems:  

o The old retainers are no longer adding much value to the business and,  

o They’re always suspected of spying for Mum or Dad on their successors and,  

o They can undermine modernisation attempts because “that’s not the way your father/mother would have done it”.  

Solution  

• Work out what, if any promises have actually been made, and the family’s appetite for dealing with the situation, now it’s been openly ventilated.  

• Compare the old retainer’s competencies and contributions against objective HR requirements to get a proper baseline fix on the scale of the issue.  

• Negotiate, or impose a more constructive employment arrangement, if possible and appropriate.  

• Negotiate, or impose an exit plan, if appropriate.  

• Whatever you do, ensure that the final solution is approved and supported by Dad or Mum.  

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50 Common Causes of Family Business Conflict ... and how to deal with them.  

Family Business Mediation Video No 47. Emotional Trauma.   

By Jon Kenfield. Solutionist & Family Business Mediator.  

•  Psychology is the science of understanding how people think, feel, behave and learn.  

• I’m not a psychologist - other than at the “chicken soup” end of the scale - however, more than 20 years spent working with denizens of business families provides many opportunities to observe how people do actually think, feel, behave and learn - and the consequences for themselves, their families and friends, and the people they work with.  

• Personal emotional trauma sits quite high amongst serious causes of conflict in those business families.    

• Sometimes causes were accidental:- unforeseen and uncontrollable events, such as a home or car accidents.  

• Sometimes economic or political - recession, depression, or war.  

• Sometimes environmental - fire, flood, famine, drought, pestilence.  

• Sometimes domestic - violent or abusive homes; absent, broken, inadequate or misguided parenting; lack of emotional intelligence or support.  

• All causes create trauma.  All trauma can lead to disruptive behaviours and dysfunctional relationships and, while these can be countenanced in a family they don’t go down well in business.  

Solution  

• The first and by far the most important response is:  take courage and be honest.  If a family member’s emotional trauma is causing bad behaviours, somebody has to own the problem and help to create a solution - the damaged individual almost certainly can’t do it alone.    

• Don’t hide reality due to personal guilt, embarrassment, or excess of protectionism - that only reinforces bad behaviours and eventually leads to explosion or implosion.  

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50 Common Causes of Family Business Conflict ... and how to deal with them.  

Family Business Mediation Audio No 46:  Ethnic Issues & Cultural Norms.   

By Jon Kenfield - Solutionist and Family Business Mediator.  

• When a family’s culture is strong, it can exert powerful influences on personal expectations and behaviours - both in the family and in its business activities.  

• Most ethnic cultures are based on historic traditions which, by definition, are anchored by the past: from another time, another place, and usually very different circumstances.  

• These cultures may make little sense, and have limited appeal, to people who haven’t grown up immersed in them - which is the classic situation for first and second generation migrant families from a troubled Europe.  

• We often see something similar with Asian families - when parents had a traditional upbringing, and their children have grown up in modern Australia.  

• When “old-school”, ethnically influenced decision-making produces business decisions that are seriously out of step with modern (normal) commercial thinking - over anything from business leadership and family succession to business investment - cultural differences and generational tensions flare into catalysts for frictions which, left unresolved, lead to conflicts - with current and next generation family members, and non-family employees. The consequences can become very unpleasant.  

Solution  

• Respect differences: there’s nothing wrong here, just an inappropriate and probably unworkable mixing of family with business decision-making that’s failing to satisfy anyone, and everything.  

• Separate family from business decision making.  

• Create separate plans and rules for each.  

• Establish separate structures and different processes - and remember which environment you’re in when making decisions.  

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50 Common Causes of Family Business Conflict ... and how to deal with them.  

Family Business Mediation Video 45  Lack of Talent in the Family.  

• Business founders are often driven individuals.  They may be motivated by creative drive, frustration in another job, identified opportunity, need to work, obligation to provide work for family members, or many other possibilities.    

• Following generations are usually less driven, mainly because they have a less desperate need to make a business in the first place.  

• As businesses grow and evolve, their needs change.  They may require more advanced technical, commercial and management skills.  Founders, and in-place leaders may develop these skills, or not.  Their progeny may develop required skills, or not.  

• As families grow through generations, the talent pool in the family may broaden, as business needs increase.  When businesses grow strongly, families generally can’t keep up with their needs and have to recruit non-family specialists and professionals to help.   

• Some families cling to the belief that some or all leading roles should be occupied by family members - despite this being objectively impractical.  This can lead to wrong people in wrong positions in the position - an obvious cause of conflict. Solution  

• Start with family values - what does the family actually want; what do individual members want?  - to be happy, or to be working in the business?  

• Do they work to live, or live to work?  Is it a family first, or business first family?  

• Once these questions have been worked out to everyone’s satisfaction, a Family Plan can be developed that works towards satisfying everyone’s desires.  

• Part of the planning process involves assessing current resources, including personnel resources, and especially family member capabilities and intentions.  

• If completed early enough, family members can be educated and trained towards appropriate future roles in the business, preferably from their childhood.  

• The Family Plan should be synchronised with the Business Plan.  The issue of family talent can then be made a structural discussion, rather than a personal one.    

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