Family business conflict and resolution
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A family business is defined as a commercial organization influenced by multiple generations of a family, impacting its decision-making and vision. Conflicts within family businesses can arise from various factors such as rivalry, succession planning, and differing perspectives, and if not managed appropriately, they can lead to destructive outcomes. Effective conflict resolution involves understanding different management styles like competition, collaboration, and compromise, as well as steps like initiating dialogue, involving all parties, and solidifying agreements.
Family business conflict and resolution
- 1. FAMILY BUSINESS CONFLICTS AND RESOLUTION
- 2. WHAT IS FAMILY BUSINESS ? A family business is a commercial organization in which decision- making is influenced by multiple generations of a family, related by blood or marriage or adoption, ╺who has both the ability to influence the vision of the business and the willingness to use this ability to pursue distinctive goals. They are closely identified with the firm through leadership or ownership. Owner-manager entrepreneurial firms are not considered to be family businesses because they lack the multi-generational dimension and family influence that create the unique dynamics and relationships of family businesses. 2
- 4. CONFLICTS IN FAMILY BUSINESS 4 - Conflict is an inevitable part of any business. - If it is managed properly an entrepreneur can take the advantage of collective knowledge, experience and expertise. - on the other hand if conflicts are not managed properly it can lead to destructive outcomes leading to poor relationship, mistrust, disrespect retaliatory behaviours and poor organisational culture and climate - If properly managed it can lead to constructive outcomes Failure to adequately control conflict in family business may contribute to the high mortality rate of family owned firms.
- 6. 6 1.Sibling and other family rivalry and childhood roles •These may follow people into adulthood. Such family relationships can adversely business outcomes. 2.Succession planning may also lead to conflicts in family business • who gets what type and amount of equity, benefit, title or role can explicit as well as implicit conflict. 3.The pursue of power, status or unearned entitlement can also lead to conflicts • These are the major causes behind succession conflicts and also result in disputes in on-going family business relationships.
- 7. 7 4. Playing by different rules also results in conflicts • When there different rules for different people belonging to the same family are associated with the business, conflicts arise. 5. Competing perspectives about business strategy • Can also lead conflicts. Such differences create fear, anger and destructive behaviours. can also lead to poor decision making and can ruin the family business
- 8. RESOLUTION OF CONFLICTS OF FAMILY BUSINESS 8
- 9. Conflicts Management Style 9 - One variable is assertiveness which is concerned with the extent to which the individual attempts to satisfy his own concern. - The other is cooperativeness that is concerned with the extent to which the individual attempts to satisfy the concerns of other persons.
- 10. The two dimension define/state five different conflicts resolution styles ╺ Competition ╺ Collaboration ╺ Avoidance ╺ Accommodation ╺ Compromise 10
- 11. 1. COMPETETION 11 Competition reflects a desire to meet one's own needs and concerns at the expense of others (win/ lose situation). The most assertive and least cooperative people use the competitive style. To achieve the desired outcome, the competitor uses whatever power is available and acceptable, e.g., rank, persuasion, expertise, economics, or coercion. Competition (or any other style) is neither good nor bad, but only one of the many styles that may be appropriate and effective, depending on the situation.
- 12. 2. ACCOMODATION 12 Accommodation means placing the other party's needs and concerns above one's own (lose/win). It is characterized by cooperative and unassertive behavior. Accommodation is appropriate and effective if one party is not as concerned as the others. It is effective when preserving harmony and avoiding disruption are important. It builds good will and leads to cooperative relationships.
- 13. 3. AVOIDANCE 13 - People using this style simply do not address the conflict and are indifferent to each other's needs and concerns (lose/lose). It is characterized by uncooperative and unassertive behavior by both parties. - Avoidance can be employed effectively as a short-term or interim strategy until more information is available or emotions cool down. It can be used as a permanent strategy if the probability of satisfying one's needs and concerns is exceedingly low.
- 14. 4. COLLABORATION 14 - People using a collaborative style aim to satisfy the needs and concerns of both parties (win/win). It involves the maximum use of both cooperation and assertion. - Collaboration requires more commitment than the other styles and takes more time and energy. With this style, the parties often are more committed to the resolution because an outcome that meets the needs of both parties is more likely to be supported.
- 15. 5. COMPROMISE 15 - Compromise is midway between the previous four styles (see figure). It will lead to a partial fulfillment of the needs, concerns, and goals of both parties. - Compared to collaboration, few issues are confronted. Compromise is appropriate when the goals of the parties are moderately important and not worth the effort and time required for collaboration.
- 17. 17 1.Initiate dialogue • Call the parties involved together and establish the fact that you will be open, honest, and attentive to everyone's needs in what is likely to be a sensitive situation. • Discuss only present problems and discuss them one at a time. Remember, everyone has a right to talk. It is important to understand every person's position. 2.Involve all parties • Next, involve all parties in the communication process. • Involvement begins by asking questions and encouraging others to answer. Listen as people respond to your questions 3.Assimilate information • The third phase is to assimilate all this information. • Everyone must consider all of the facts and feelings. Clarify every position expressed and its cause.
- 18. 18 4. Reinforce agreements • The next step is to reinforce agreements. Reinforcing agreements is a powerful psychological tool. • This process builds trust and understanding and makes negotiating easier. Always reinforce agreements before you negotiate disagreements. 5.Negotiate disagreements • This begins by reviewing and ranking the disagreements. When issues are ranked, seek adjustments from each adversary, with the most insignificant or easiest problem first. • Remind them that you cannot negotiate disagreements until the facts and feelings are understood by everyone. 6. Solidify agreements • The last step is to solidify agreements and confirm solutions to the problem. Begin by reviewing the changes agreed to, and ask if compromises are still acceptable. • Review proposed actions carefully. Commitment to the adjustment can be confirmed through formal or informal contracts, a checklist, a handshake, or even a hug..
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