Build cohesion, reduce unhealthy conflict
Our data point to the important role cohesion plays in reducing conflict. Fifty-seven percent of low-conflict families had high cohesion, while only 47% of high-conflict families reported high cohesion. On the other end of the spectrum, just 6% of low-conflict families also had low cohesion, while 13% of high-conflict families also had low cohesion.
Our findings show that these activities are important for reducing conflict in the world’s largest family businesses:
1. Engage in frequent communication
Communication is the factor most associated with lower levels of conflict for our survey respondents. Communication works to improve trust, reduce misinterpretations, enable rapid discussion of disagreements as soon as they arise, improve the chances that important information will be conveyed and understood, and strengthen relationships in general.
2. Develop unifying emotional attachments through corporate social responsibility efforts
In the world’s largest family businesses, attitudes toward corporate social responsibility (CSR) activities inversely correlated with the incidence of conflict. In general, the more important CSR is to the family, the less conflict they reported. Finding compelling CSR goals that all family members can get excited about is important for overall family health and is associated with a reduced level of family conflict.
3. Set expectations
If you agree on and set expectations ahead of time, the chances for conflict are greatly reduced. Expectations can cover a range of issues large and small, such as who works in the business, the criteria for employment, how decisions are made, how salaries are set and who is a shareholder. These conversations are often difficult and time-consuming, but they are well worth the effort. It’s harder to agree on difficult issues when in the midst of an emotional conflict, so resolving them before conflict erupts is good practice.
4. Build a sense of purpose and mission
A unified purpose and mission that family members find compelling and personally important serve to build trust, as does a willingness to sacrifice short-term benefits for the long-term health of the family. They see that helping the family succeed enables the achievement of unselfish goals about which they are passionate. This also dovetails with our findings about the connection between commitment to CSR and reduced conflict.
5. Create formal mechanisms for recognizing and resolving conflict
Charge a small subset of family members to identify destructive conflict and urge the parties to seek outside resources to help resolve it. A family council (a group charged with coordinating and in some respects “governing” the family) is ideal for this role. The board of directors, particularly outside directors, can also assist with conflict resolutions and even adjudicate business-related family conflicts.
While unhealthy conflict can prove devastating to a family business, not all conflict is dysfunctional, and there are many ways to calm any brewing storms.
Family businesses shouldn’t hide or shy away from conflict. Instead, they should work hard to reduce and resolve dysfunctional conflict and fully embrace the healthy aspects of conflict and the benefits it can generate.