Conflict and Mediation in Family Businesses

Family businesses make up more than 60% of all companies in Europe being large employers and playing a paramount role in the economic development of the region.

This kind of businesses face many challenges, from access to finance, to planning for succession and dealing with organisational governance.
In family businesses, relationships and organisational decisions overlap through the personal and professional lives of the family members, sometimes involving past disputes and misunderstandings, related or unrelated to the business itself. Therefore, if conflict is a natural aspect of human interaction, it is not surprising to see why conflict in family businesses is so prevalent and difficult to deal with.

Sources of conflict
The reasons for conflict in family businesses are of a particular nature because they will involve emotional aspects, strong attachments, past disputes, and indelible memories paired with the day to day work issues. In this context, the main sources of conflict arise from:

1. Having different visions for the business.
If the vision and values of the company are not clearly stated, it is likely that every family member will have its own, a situation that will inevitably lead to misunderstandings.

2.  The nature of personal relationships
From rivalries amongst siblings to the intervention of in-laws and spouses, emotional relationships will affect the business. In the case of siblings, the parent authority needs to aim for equality and accountability. For in-laws and spouses, the degree of their engagement needs to be clearly stated.

3. Financial issues
Remuneration and rewards, if perceived inequitable or biased, will lead to conflict. Secondly, it is common that family businesses fail to differentiate between the family and the business finances, again, leading to tensions.

4.  Ownership and Succession
A clear statement of ownership is paramount to avoid future disputes. This will also be the foundations to build a transfer process to the next generation.

Being aware of the sources of conflict is the first step to adopt measures to avoid conflict and to prepare to deal with it. However, it is possible that conflicts become difficult to solve within the organisation, and that is when external mediation can be a solution.
Mediation is an informal process of dispute resolution not limited by rules of evidence, procedure or remedy, where an external mediator will intervene to find common ground for both the parts in conflict to find a solution.
The role of a mediator is not to say what is right or wrong or what should be done, but rather to make suggestions to break a standoff. It will help parties communicate better and work together towards finding solutions creating a non-adversarial environment.
A skilled mediator can play a key role to help family businesses solve problems and avoid repeating old counterproductive behaviours and patterns in the future.

Conflict is inevitable in the family business context, but family members and staff can start by understanding the nature of conflict. When conflicts are impossible to deal with, external mediation is a useful and flexible tool that can make a significant contribution to conflict resolution and conflict prevention, both fundamental for the permanence and advancement of the organisation.
Further, individuals can also take action to face and solve conflict. As part of the Skills4Succession project, we will teach learners how to use NLP techniques to deal with conflict at the personal level first.

Produced By INOVA

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