MGT 4550 Family Business Management

CONFLICT MANAGEMENT

Chapter 4
Family Business Management,
Concepts and Practice
by A. Bakr Ibrahim & Willard H. Ellis

Instructor: Dr. Irene Duhaime

Class Schedule - Week 4

CONFLICT

MANAGEMENT IN FAMILY

BUSINESS

Reading: Chapter 4

Cases:

Precista Tools AG (A), p.157 FBM

Northern Construction Inc., p.203 FBM

Questions 9, 24, 70, 77, 85, 86,90 FBAB

PROJECT TOPICS DUE

Dr. Irene M. Duhaime

Contents
The

Traditional Vs. The Behavioral View

Causes

of Conflict in the Family Business

Common

Sources of Conflict

Father-Son/Daughter

Rivalry

Rivalries

Between Brothers: the Favorite Son

Syndrome
continued .

Dr. Irene M. Duhaime

Contents
. continued

Conflict

Between Other Members of the

Family
Conflict between Family and Non-family
members
Managing
Other

Conflict

Conflict Resolution Methods

Dr. Irene M. Duhaime

The Traditional Vs. The

Behavioral View
Traditional

View

..conflict is unhealthy for organizations and must

be avoided

Contemporary

Functional / Positive

or Behavioral View

innovation, creativity, energy and enhanced performance

Dysfunctional / Negative

must be avoided or managed to minimize damage

Dr. Irene M. Duhaime

Causes of Conflict in the

Family Business
The Overlap Between the Family and Business Systems

The
B u s in e s s
S y s te m :
R e s u lto r ie n te d

C o n f lic t

The
F a m ily
S y s te m :
E m o t io n a lly
based.

F i g u r e 4 . 1 C o n f lic t in F a m ily F ir m s
F a m ily B u s in e s s m a n a g e m e n t, I b r a h im & E llis

Dr. Irene M. Duhaime

Causes of Conflict in the

Family Business
Ambiguity

of roles

Differences

in power and status among

family and non-family members

Hasty

and /or unfair succession process

Rivalries
Favorite

among family members

Son/daughter syndrome
continued

Dr. Irene M. Duhaime

Causes of Conflict in the

Family Business
.. continued

Lack

of clear and coherent policies

regarding career development,
compensation and hiring

Lack

of code of conduct

Lack

of proper job descriptions and clear

boundaries
Dr. Irene M. Duhaime

Common Sources of
Conflict
Father-Son/Daughter

Rivalry

Rivalries

between offspring

Conflict

between other members of the

family
Conflict

between family and non-family

members
Dr. Irene M. Duhaime

Father-Son/Daughter
Rivalry
Founders

Psychological Make-up

Strong sense of attachment

Reluctance to give up control and power
Unwillingness to delegate

Son/daughter

has a need for independence

and grows impatient
Conflict leads to strained relationships, rivalry
and power struggle
Dr. Irene M. Duhaime

10

Father-Son/Daughter
Rivalry
Value

Difference Between Generations

Differences in values, vision and management

styles

Leads to increased tension

Dr. Irene M. Duhaime

11

Father-Son/Daughter
Rivalry
The

Path to Self-Validation

Drive to equal or outdo father

Feeling the he/she cannot measure up to father

Offspring

should

Do his/her own thing and make own choices

Understand own feelings and own motivation
Understand fathers feelings
Prevent father from playing off against other offspring

Source: Levinson: Conflicts that Plague the Family Business, Harvard Business Review

Dr. Irene M. Duhaime

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Father-Son/Daughter
Rivalry
Mechanisms

to Resolve Conflict

Succession plan

Third-party intervention

Peacemaker

Wise man/woman in the family

Consultant/lawyer, accountant

Dr. Irene M. Duhaime

13

Rivalries Between Offspring:

the Favorite Son Syndrome

Father playing off offspring against one another

An elder Son/daughter not being selected as a

successor
Ambiguity or uncertainty concerning career path,
promotion and compensation
An emotional involvement with one of the offspring,
as in Favorite Son Syndrome
Using age rather than competence as a basis for
promoting or compensating family member.

Dr. Irene M. Duhaime

14

Rivalries Between Offspring:

Mechanisms to Resolve Conflict
Succession plan
CEO intervention
Job descriptions
Introducing professional management
Confrontation meeting
Communication - weekly supper
Restructuring - creating zone of comfort/territories

Dr. Irene M. Duhaime

15

Conflict Between Other

Members of the Family
Caused

by

Lack of, or unfair succession process

Value differences between generations

Ineffective communication

Unclear definition of roles and responsibilities

Undefined or poorly defined policies on division
of labor, career development and business
procedures

Dr. Irene M. Duhaime

16

Conflict Between Other

Members of the Family
Mechanisms

to Resolve Conflict

Job descriptions

CEO intervention

Confrontation meeting

Code of conduct

Communication - weekly supper

Dr. Irene M. Duhaime

17

Conflict between Family

and Non-family members

Initiated

by conflict between family members

Nepotism

Son of the boss (SOB) Syndrome

Non-consultation

in decision-making

The Weekly Family Supper

Undefined

or poorly defined policies on

division of labor, career development and
business procedures
Dr. Irene M. Duhaime

18

Conflict between Family

and Non-family members
Mechanisms

to Resolve Conflict

Clear policies concerning career development

Job descriptions

Communications

Introducing professional management

Dr. Irene M. Duhaime

19

Managing Conflict
Setting

Clear Guidelines

Jurisdiction, compensation, career

development, code of conduct, objectives,
performance assessment criteria

Remove ambiguity

Set clear expectations

Dr. Irene M. Duhaime

20

Managing Conflict
Managing

confrontation

Face-to-face meetings
One-on-one meetings with CEO/Founder
and employees involved in conflict

Group meetings

Breaking deadlocks

Act early
Dr. Irene M. Duhaime

21

Managing Conflict
The

CEO/Founder as Chief Arbiter

Avoid enlisting allies in conflict situations

Avoid taking sides in conflict situations

Allow expression of feelings

Set aside time to resolve dispute and reduce
tension
Develop appropriate mechanisms for resolving
conflict

Create a healthy business environment

Dr. Irene M. Duhaime

22

Managing Conflict
The

Peacemaker

The Family Wise man/woman

A neutral relative
Non-family third party (lawyer, accountant,
family friend)

Helps to reconcile varying points of view

Respected by all parties

Dr. Irene M. Duhaime

23

Managing Conflict
Communication

The Weekly Family Supper

Relaxed atmosphere

Family members freely express feelings

Discuss working relationships

Share points of view

Resolve personal issues

Other Weekly Meetings to accommodate nonfamily members

Dr. Irene M. Duhaime

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Managing Conflict
Introducing

Professional Management

Non-family member

Provide objectivity

Encourage professional attitudes in family

members

Dr. Irene M. Duhaime

25

Other Conflict Resolution

Methods

Expansion

of Resources

avoid win-lose disagreements

Avoidance

Non-serious problems, provide a cooling off period

Smoothing

minimize differences, focus on sharing, provide

reassurance;
not a long-term solution;
serious problems can remain and fester

Dr. Irene M. Duhaime

26

Other Conflict Resolution

Methods
Compromise

win-win situations

middle ground over extremes

parties make concessions

may not be the best solution

Dr. Irene M. Duhaime

27

Other Conflict Resolution

Methods
Forcing

Use of formal or positional authority

Issuing of directives

Win-lose situation

Tendency towards dominance and cohesion

Often creates negative feelings

Dr. Irene M. Duhaime

28

Other Conflict Resolution

Methods
Redesigning

the Structure of the Family

Business

Introduce a reporting hierarchy

Separation of roles and responsibilities

Clear delineation of mandates

Definition of jurisdiction and boundaries

Reassignment of conflicting parties

Dr. Irene M. Duhaime

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Cases
CONFLICT

MANAGEMENT IN FAMILY
BUSINESSES

Cases:

Northern Construction Inc., p.203 FBM

Questions 9, 24, 70, 77, 85, 86,90 FBAB

Dr. Irene M. Duhaime

30

Question 9
Should a rocky relationship with a child,
parent, sibling while growing up be a
deterrent to entering the business?
It it possible to repair these relationship?

Dr. Irene M. Duhaime

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Question 24
How does a woman deal with
patronizing behavior, including a lower
salary

Dr. Irene M. Duhaime

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Question 59
What guidelines can you offer to help
siblings or cousins working together?

Dr. Irene M. Duhaime

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Question 70
Are there some positive benefits to a
dispute among family members?
What are the best methods of conflict
resolution?

Dr. Irene M. Duhaime

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Question 77
If trouble brews, should you seek outside
help?
And from whom?

Dr. Irene M. Duhaime

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Question 85
Can power struggles between siblings
and other family factions create a bad
business climate?
How can such struggles be defused so
they dont undermine the business?

Dr. Irene M. Duhaime

36

Question 86
How can you handle theft or substance
abuse in a family business?

Dr. Irene M. Duhaime

37

Question 90
What

are the different types of company

cultures that can exist in a family business
and does it matter for family harmony and
good business ?

What

can you do to emphasize more, the

cultures good points and change its
negative ones?
Dr. Irene M. Duhaime

38

Class Schedule Next Week

SUCCESSION

- SENIOR GENERATIONS
PERSPECTIVE

Reading: Chapter 5

Questions

3, 5, 7, 19, 21, 27-31, 33-35, 52, 75, 76, 80 FBAB

Case:

Baker, Inc. p. 287 FBM

Dr. Irene M. Duhaime

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