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msi_-_conflictBy Michael Woodward, Mackay Bailey, Accountants, Christchurch NZ

One of the most challenging aspects of consulting to family business is where conflict exists between members in a family group. Conflict can arise in a number of relationships including conflicts between spouses, between parent and sibling and between siblings just to name a few. So what should you do if conflict exists in your family business? Remember that:

  • Conflict is normal
  • Differences of opinion are often healthy and can promote good results for the businessConflict can be positive provided that it is managed correctly. Unmanaged conflict can be destructive
  • Do not let matters fester. Deal with conflict quickly and in a fair manner
  • Ruling with an iron fist will often give rise to the worst outcome
  • Prevention is often better than cure

In our experience, conflict can be prevented, managed or resolved in the family business through a number of processes including:

  • Clearly defined policies for family members that relate to job roles, remuneration, qualifications and so on
  • Structured and formalised family meetings
  • Strong and effective governance structures including clearly defined leadership
  • A conflict resolution system that is clear and understood by all family members
  • Ensure that communication channels are open at all times

Many businesses will recognise the issues covered in this article – some will have addressed them, some will not have. For those that have not, often the most difficult thing is to know where to start. Your contact accountant will be able kick-start the process on the following basis:

  • Facilitation of family meetings
  • Establishment of family charters or constitutions
  • Establishment of governance structures and reporting frameworks for both the family and the family business
  • Access to qualified behavioural therapists to assist the resolution of existing conflicts

Whatever the situation, the most important thing is that you have the processes in place to deal with matters of family conflict within the family business. If everyone understands a set of rules and processes that are clearly set out, it enables a sensible discussion to take place early.

Contact the author directly by email or by telephone.

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