The Top 10 Reasons for Conflict in a Family Business

Updated: Oct 27, 2020

Family Business Conflict Resolution

Family Business Conflicts and Disputes

If you are part of a family business, you are likely no stranger to conflict.

Conflict and disputes in a family business are about as likely as the sun rising each morning.

And it doesn't matter how great your family or your business is. Conflicts happen. It's only a matter of how often, and how intense they are.

To help you minimize the conflict in your family business, we are providing a list of the 10 most common reasons that conflict and disputes occur in a family business.

it is our hope that if you know what causes conflict in a family business, you can do your best to minimize the both the cause and the negative affects of family business conflict.

Here they are, in no particular order of importance:

1. Communication

Or should we say a lack of communication.

When family members don't communicate regularly, and positively about business issues, conflict is sure to occur.

2. Lack of a Voice

When a family member feels like they have no voice or no say in the family business, that family member is sure to become agitated and frustrated.

When a person feels like they have no voice, they will begin to feel like their needs are not being met, and some level of overt or underlying conflict will soon manifest itself.

3. Money

Conflict about money can come in all shapes and sizes.

It may be conflict over the lack of profitability of the family business.

Or, it may be conflict over who is getting paid what from the family business.

No matter the specifics, money will almost always create conflict at one time or another.

4. Power

Like conflict over money, conflict over power in the family business can come in many different forms.

If one family member holds all of the power, or if one child holds a position of power over siblings, conflict is sure to arise.

5. Lack of Leadership

When there is a lack of clear and authentic leadership in a family business, other family members will seek to fill the leadership void.

As family members compete for a position of leadership, conflict between competing family members will occur.

6. Lack of Clear Channels of Accountability

When it is unclear who a family member is accountable to, conflict can arise as other family members try to assert their position as the person that others are accountable to.

Or, it could be a matter of a family member, or family members, not being accountable to the needs of the business and that creates conflict as other family take offense to this type of attitude or behavior.

7. Lack of Defined Roles and Responsibilities

When job descriptions and roles and responsibilities are unclear, people become confused about who is supposed to do what.

This confusion leads to conflict as family members try to sort things out on their own.

8. Mixing Business Relationships with Family Relationships

When a business family cannot set boundaries separating what happens at home from what happens at work, conflict will soon follow.

If a brother and sister had an argument over family dinner on Sunday, and they bring that hostility to work on Monday morning, the family conflict will become professional conflict.

Boundaries and professional decorum need to be established to prevent family dynamics from entering the business.

9. Sense of Entitlement

This can apply to any and all family members.

The son of the business owner my feel like he doesn't need to show up on time and that creates conflict between the son/employee and his dad, the boss.

Or, it may be that the senior generation feels like they have worked hard to build the business and can spend business money on personal purchases even when their children are minority partners in the business. The kids will likely resent the way mom and dad are spending corporate funds.

In all cases, where a sense of entitlement exists, conflict won't be far behind.

10. Unmet Expectations

The feeling of unmet expectations may lead to conflict.

Mom and dad, who founded the family business may be disappointed in the level of effort their kids, who they brought into the business are showing. They expected the kids to work as hard as they did.

Or, the kids may have expected to get a discounted price when they are buying the family business, only to find out that mom and dad want fair market value for the business.

If expectations aren't clearly stated upfront, its likely that hard feelings and resentment will be the result.

Closing Thoughts

When you know what causes conflict in a family business, you can work hard to try and mitigate the causes of conflict and also reduce the negative effects of the family conflict.

It's important to remember that conflict in a family business can never be completely eliminated, and anyone who works in a family business should be prepared to handle conflict in a positive way.

About the Author:

Chris Hall is a family business advisor and helps business families overcome conflict and disputes in their family business. You can learn more at: www.abbusinessbuilders.ca

If you need help resolving conflict in your family business, contact Chris at welcometo@abbusinessbuilders.ca

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