Family Business: How To Deal With Family Feuds

Family Business: How To Deal With Family Feuds
By Stephen BRAY, Principal, 'The Family Business School'

Every family has its share of disagreements but feuds are very destructive and are best avoided. In family businesses feuds frequently spill over into the family business and affect the way the business is run. Studies indicate that family feuds are one of the major factors that affect the survival rate of a family business.

Many people have the misconception that successful family businesses are those that have family members who share a common view of the company's objectives and how to attain them. This isn't the case. In fact, in most cases, it's actually the opposite that is true. Like most families, even successful family businesses have their share of disagreements, but these are talked about and resolved using a range of procedures.

Successful family businesses have learned how to deal with their disagreements and feuds. They have learned the importance of dialog to their family business success. And although some tension may still remain among certain family members, they have learned not let it affect the day-to-day operations of the business.

For example, Fred and Victoria are the owners of a third-generation business, with sales of over $6 million a year. They have four adult children who hold senior positions in the business. Everyone attends a formal family meeting every month where each person delivers a progress report on his area of responsibility and gives updates on action items from the previous month's report. The family also takes up new proposals and has discussions and debates on new issues and ideas. At times, no decisions are reached on key issues, but the family members agree to continue the discussion at a later meeting when more information and research is available.

Fred and Victoria are very pleased at the way these family meetings work. They have every reason to be since these meetings are a prime example of a family working together harmoniously in the best interests of the family business. However, this wasn't always the case.

There was a time when Fred and Victoria dreaded the monthly family meetings. It seemed like nothing positive ever came about. The family generally feuded about this thing or that and people would lose their temper and engage in screaming matches, insulting each other viciously. It came to the point that Fred and Victoria wanted to stop these family meetings because they felt that it was only tearing the family apart. They had even thought about selling the family business because they could not see it being run effectively by their children after they had retired.

One night, after one particularly emotional family meeting, Fred and Victoria sat down at home and wondered where they might turn for help with their feuding problem. They spoke with their accountant who advised them to engage a family business consultant with background training in family therapy.

In the event they engaged Jack Woodlander. Jack had spent his early years in banking before changing careers and obtaining a Master’s in psychology. During his second career he worked with families in hospitals treating such conditions as eating disorders with family therapy skills. Jack’s career in the hospital ended at retirement but Jack felt himself to be too young to stop working, and ‘waste’ his skills. He therefore studied family business consulting and had recently ‘hung his shingle on his door’ when he was consulted by Fred and Victoria.

Fred and Vera had three things at the end first meeting with: (1) A better understanding about how each of them was misunderstanding the other: (2) A list of rules that everyone should follow at family meetings; and (3) A decision to bring in an outside party into the monthly meetings to ensure that the rules were followed. The couple agreed that the outside party had to be someone everybody respected. They agreed to bring in Uncle Harry, the brother of Fred's father who was also a highly respected lawyer in the state.

Fred and Victoria agreed that the biggest problem at the monthly meeting was that no one wanted to listen or give credence to other people's point of view. Hence, much of the rules revolved around that. The seven simple rules they discovered with Jack Woodlander’s help are:

1. Try to understand the point of view of other family members. Think before you talk.

2. Recognize that key decisions are reached one conversation at a time. Never raise your voice to prove a point or shoot someone else's point down.

3. If you disagree with someone, request for more information and insight from that person. Ask for examples that will help you understand his point of view.

4. In cases of strong disagreement, never forget that the family comes first and that our shared commitment to the common good is of the utmost importance.

5. As a group, agree on a "Rules of Behavior" that everyone swears to follow in order to avoid a lack of etiquette and boorish behavior.

6. Sarcasm is not allowed. Never ridicule or insult any other family member. Recognize that it is acceptable to have different opinions.

7. Set a time limit for debate. When that time limit elapses and no consensus is reached, agree to table the topic for further research and for discussion in a later meeting.

Everyone agreed to the rules and gave his commitment to abide by them. But this did not mean that changes came right away. Meaningful change rarely does. But in time and with everyone's total commitment to these seven rules, all the family learned how to have more effective meetings. Today, Fred and Victoria both feel that these monthly meetings are the backbone of their family business.

You may ask why Fred and Victoria didn’t ask Jack Woodlander, their family business consultant, to act as ‘umpire’ in the monthly meetings. Well they did, but Jack declined: “It’s not a family business consultant’s job to join the family firm,” he explained. “My task is to provide skilled specialized help when needed and enable your family to create your own solutions.”