5 Steps to Overcome Conflicts in the Family Business

Posted by Guthrie-Jensen Consultants

Operating a family-owned business can be a difficult venture, no thanks to conflicts that could arise internally and put a strain on your personal relationships.

If you own or manage a family business, you can probably attest to this statement from FINH’s Managing Director David Harland, “When colleagues and employees are also family members, ordinary conflict can take on new dimensions.”

You might find it hard to balance both the interests of the business and the family member who’s involved in the conflict. It could get worse if you have an unstructured family business that doesn’t implement any conflict management and resolution program in settling disputes.


Here are common examples of conflicts that could happen in a family business.


Rivalry may spring between parents and their children, as well as between siblings – anyone who has a hand in managing the business. There are varied reasons family members may feel that there’s a competition going on between them.

In some cases, someone in the family is trying to outdo the other in handling the business operations. It could also be an attempt to establish oneself as the higher authority, the one who gets to have the last say in making crucial decisions.

Whatever the case, rivalry can cause great tension between or among the opposing sides and the people around them.

Favoritism or Nepotism

Favoritism is a deep-rooted problem among families. Usually, it’s the elder children who can easily gain the approval or favor of their parents even if that is not their intention. This creates ill feelings among younger siblings who may feel not appreciated for what they do.

Favoritism in the family extends to the business setup when parents relegate control to the elder child, and the younger children must work harder to prove their own worth.

It’s also possible for nepotism to find its way into the family business. For example, the founder or any member of the family tries to repay a favor toward someone, so they use their power or influence to bring that person in as an employee or business partner regardless of lack of qualifications. Hiring someone who’s unqualified would, of course, have serious implications for the business.

Intrafamily Friction

In closely-knit families, relatives may expect that they will automatically have a place in the business. Ultimately, business owners or managers need to be firm in their decision if they think hiring relatives is not a good option, especially for sinecure jobs.
Financial Disputes – Money issues are another source of conflict for family-owned businesses. The financial manager might have problems managing the funds properly, causing the business to lose profit.

It’s also possible for someone to have the wrong mindset – thinking that they could spend the business’ money however they want since it belongs to the family anyway.


Tips to help you avoid potential conflicts in your family-owned business:

Hire wisely.

As much as possible, you should avoid hiring someone from the family. There’s a big difference being around your in-laws as part of your family connections and in hiring them as company employees, especially when they have little or no knowledge at all as to how the business operates.

Have family meetings.

You could use family meetings either as a preventive measure when you notice that conflicts are starting to build up or as a regular company event.

Either way, family meetings provide a venue for everyone to share relevant information or updates on business projects; plan for the future; and voice out their concerns on issues that are affecting them and the company.

Establish shared family values, goals, and objectives.

The key to a harmonious working relationship with your family is to make sure that everyone understands what you’re trying to achieve and how meeting that goal can benefit your family individually and as a business unit.

It’s also important to share the same family values with one another and that there’s an attempt to stay away from misconduct that will not contribute to your goals.

When conflicts arise, take a structured approach to resolution.

Conflicts are part of any business, whether family-owned or not. This means that you could take after conflict resolution processes being adopted by many companies, which may include setting up a grievance committee or council.

This group can provide a proper forum that can facilitate a safe, organized method of resolving issues through dialogue.

Seek the help of mediators.

Some conflicts cannot be resolved among your family members, so it might be best to bring in experts to help you reach an agreement through a formal mediation process.

Expert mediators have an objective view of the issue and can use their training to lead your family through initial talks until you reach a final resolution.


Conflicts in the family business are inevitable, but they can be overcome. Everyone involved in this venture needs to commit to resolving them for the good of the company.

If you’re encountering any of these issues in your own company, get a training and learn how to manage your family business effectively.

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