FPMG Identifies Ways to Defuse Conflict in Family Businesses

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Performance management firm shares how family issues hinder business success.

FPMG Defusing Conflict

FPMG Defusing Conflict

Parents often inadvertently cause problems because they make assumptions and decisions out of guilt rather than good business sense.

The issue of generational transition in family businesses is highlighted in the Jan/Feb 2014 issue of Family Business magazine, a nod to the fact that failing to defuse issues unique to families that work together can derail the whole business. FPMG, a performance management firm, knows all too well how family-specific issues can negatively affect family businesses, and it has identified some ways to defuse common areas of conflict.

“Sibling rivalry, jealousy and other unpleasant issues can have a negative effect on even the strongest families,” says Denise Federer, Ph.D., FPMG founder. “When you add the existence of a family business, the stakes are higher, as is the potential for dysfunction and unhappiness. One point I can’t stress enough is if the family itself is unhealthy, that will be revisited tenfold in a family business.”

FPMG notes that the typical areas of conflict can be divided into two types: those on the surface (or content issues) and those that are underlying (or process issues). Surface issues include respecting boundaries, power struggles, hidden agendas, compensation, entry and promotion, succession, ownership, and communication, while underlying issues include feeling disrespected/patronized/not taken seriously, need for love and recognition, lack of trust, presence of favoritism, and lack of fairness.

Federer acknowledges that’s a lot to digest, and not easy to address all at once. For the sake of the long-term future of any family business, however, she believes these issues need to be discussed before it’s too late and the damage—to the business, the family or both—has been done.

“Parents often inadvertently cause problems because they make assumptions and decisions out of guilt rather than good business sense,” Federer says. “For instance, it’s quite common to see an older sibling given a position of responsibility simply due to birth order—when a younger sibling may be better suited for that specific role.”

FPMG offers some suggestions to help address the issues noted above and keep things at the kitchen table and in the boardroom on an even keel:

  • Focus on transparency—ensure everyone is aware how decisions on promotions, salaries, new hires, etc. will be made
  • Don’t make assumptions—gauge siblings’ skill sets and desire to have an active role
  • Be proactive—identify the skills needed for all roles and find spaces for everyone that fit their strengths
  • Implement checks and balances—ensure one sibling doesn’t have the ability to become a dictator
  • Create standards—make sure everyone is judged on the same criteria
  • Encourage honest communication—put out fires immediately, since simmering resentment will ultimately boil over

Federer notes that families may also find identifying values is helpful, to ensure everyone is on the same page. And, when it’s believed some objective counsel is needed, forming an advisory board can be quite beneficial.

“It can be challenging to operate like a business while feeling and thinking like a family—but it certainly can be done and is done in thousands of successful family businesses across the country,” Federer says.

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Denise Federer
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