Conflict resolution

Falling out and making up

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By their very nature, the relationships among members of family-run businesses are critical to the health of the enterprise—either a source of resilience or, potentially, an agent of disruption.

We found that the ability to manage differences of opinion smoothly has become more important than ever; indeed, the percentage of family firms experiencing tension has increased significantly during the past three years. Nearly half the people we talked to reported arguments about the future direction of the business, and nearly two-fifths said they’d argued about the performance of family members employed in the firm. This may be compounded by the sharp increase (64% over 43%, in 2007) we found in instances of preferential hiring of family members.

Yet only 29% of the companies in our sample have introduced any procedures for dealing with disputes between family members. (The smaller and younger the company, the less likely it is to have done so.) The few firms that have put such measures in place tend to favour shareholder agreements, whereas family councils were the most popular means of resolving arguments about the business in 2007. The use of third-party mediation is also more widespread at present, particularly in mature markets.

• Family Business Survey 2012
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