Rampant Conflicts that Decimate a Family Business

Business conflict

Family businesses are subject to disputes that can mushroom to be costly and protracted on either of the spouse(s) or partner(s). Operating a family-controlled business can get complicated by friction resulting from rivalries among family members who assume positions of power. Unless the principals confront hostilities, the business and its employees are on the brink of devastation. Clearly, when managerial decisions are influenced due to nepotism, honoring a family tradition or unfair division of responsibilities, the business is likely to run into trouble. There could be several ways to resolve conflicts; one good way I advise is to consult with an expert Business Law firm like Prime Lawyers. Let’s talk about some wild conflicts that destroy a family business.

‘Father-Son Rivalry’           

The founder gets attached to his/her business deeply. The business, in other words, becomes the founder’s extension. Characteristically, the owner bears great difficulties in delegation and devolution of authorities and control. This behavior often leads to grim repercussions for the relationship between father and son. Subconsciously, the father feels and wishes to pass on his business to his son but finds it hard to materialize the succession. Moreover, the father continues to showcase his competence and reassures himself that his withdrawal might lead to catastrophic consequences for the business. These contradictory feelings cloud his judgment and in fact, narrow down his vision of business success. Frustrated by his elder’s intrusions, the son naturally reflects emotions of rivalry against his father’s false sense of self-aggrandizement. I have personally witnessed men assuming positions in their family businesses being victimized by their fathers who chair the board.

Tactical Miscalculations

Disgruntled by his father’s hegemony, the son fiercely competes to free himself of the abject dependence on his elder. The struggle for control remains a stand-off. If the son discovers the weaknesses and peculiarities of his father’s authority, he strategizes to take over. The powerful façade of the leader although hampers such efforts yet can be subject to failure and recession. Normally, the son teams up with other members of the board to plot against his father and falls prey to the board’s predatory tactics. It then becomes essential to bind together the fabric of family ownership and this responsibility can either be upheld by the son or his father.

Brother-Brother Rivalry

In other instances where the leader departs splitting the ownership amongst his sons, the rivalry can have daunting ramifications. The usual sibling rivalry for the parent’s approval continues in adult life too. It can reach to the extent where management decisions are taken purely to overthrow control or destabilize a position. Personal hostilities pave a path for destructive decision making and often result in business losses. This raises concerns across the board and can disrupt the strategic calculus of the company.

Intra-Family Friction

Sometimes the problems amongst immediate family extend to relatives if they are involved in ownership or profit-sharing. The commander, in effect, feels heavily responsible for the entire family fortune and a small dip in profits can raise brows and generate friction. The real challenge is the tightly-knit relations that the owner cannot dismiss. This embroils the organization and harvests suffering but peace.

Toward Professional Management

When there are multiple claimants of ownership or complex family hierarchy in the business, the best way-out is outsourcing. The family should establish a trust sidelining all relatives out of the business operations. In general, professional management is the wisest course of action. It allows for objectives’ resolution and fulfillment along with monitoring and control of the business and corporate strategy.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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