How Not to be the Next Family Business Scandal

Admit it. Don’t you enjoy reading about family business scandals?

It makes your family business seem more normal. You’re not alone. The most popular category of articles on Fambiz are about conflicts and family scandals.

Virtually every family business scandal originates from some form of conflict; sibling rivalry, compensation, favoritism.

In our family business conflict didn’t exist between family members. We were fortunate. Where conflict did come into play was when the company began to grow rapidly and we began to professionalize the business. This brought up contentious issues like how fast to grow, hiring non-family talent, changes in roles and corporate culture. The difference was these issues were business-related and weren’t personal.

Conflict is usually dormant in the early years of a family business, but often gets uncovered when a business is getting ready to transfer to the next generation.

Succession involves a change in leadership which brings up conflict issues including:

  • Feelings of jealousy
  • Sibling rivalry
  • Lack of recognition
  • Job competition
  • Favoritism – from senior generation towards children
  • Compensation
  • Extended family entering business


5 Ways to Help Deal With Conflict:

1. Identify the source of the conflict

  • Personal or professional

2. Create a safe setting

  • Creating a safe setting to discuss these issues can help get the process started

3. Remove the personal side

  • Focus on the issue not the person
  • Removing the personal side from the issue can help prevent confrontations  

4. Be supportive and give reassurances

  • Identify some positive aspect about the conflict

5. Identify a few breakthrough points

  • When you reach these breakthroughs embrace them to reinforce the progress in dealing with the issue

It all comes down to family communication

  • Put more things in writing. Not in a bureaucratic or CYA way, but to better clarify roles and plans for the business
  • Communication in any family (let alone a family business) can feel awkward at times. Most of us aren’t comfortable sharing feelings or thoughts within the family
  • A family retreat to discuss family member’s personal and professional goals can help break the ice.
  • If a conflict is serious, discussing how it impacts not just the family, but also the business, can help move it forward. Run through scenarios of how the conflict can affect the business.
  • Identify conflict earlier can prevent it from escalating. Too often we let it get to a point where it’s a crisis

Of course, you don’t have to wait for conflict to happen before following these tips. Putting these communication methods in place before the conflict occurs can help diminish and prevent it from building.