The Top 3 Causes of Conflict in Family Business, and How to Begin to Diffuse It

By Andy Johnson 

My first career was in architecture.  My father was an architect and it came naturally to me as well.  Right out of college, I took a job at a local firm that specialized in school design.  Because I had interned with my dad during my college years, I was able to shorten the three years required prior to taking the licensure exam down to two.  I took the California architecture exam consisting of nine sections over three days and passed it the first time.  With my new license in hand, it didn’t take long for my dad to suggest that we go into business together.

There I was, all of 25 years old and a licensed architect, in partnership with my dad who had been practicing for over 30 years.  As an introvert, I focused on the business side of things and he, an extrovert, brought most of the clients in.  Everything actually worked fine until the recession of the early ’90s hit.  I eventually ended up relocating to Idaho and started my own firm there.  My dad eventually came to Idaho as well, and worked for me in the new firm, along with a staff of 12 people.

Having been my father’s employee, partner and eventual boss, I know first hand some of the struggles involved in working with family.  This is part of the understanding I bring to the task of helping family businesses get and stay healthy and conflict-free.

Family businesses often bring family dynamics and conflict into the mix.  Businesses have conflict, family businesses tend to have even more.  Here are three of the top underlying causes of conflict I tend to see:

  1. Confusion between the two systems
    I would say this is the big one.  In a family business there are two systems, the family system and the business system.  Too often, these two are blurred together.  Who is each person in each system?  Often roles from one system are carried over to the other.  Each system should have different definitions and boundaries to prevent cross-over between systems.
  2. Sibling and other rivalries
    As it was in the family, so it tends to be in the family business.  Unresolved sibling and other rivalries often fuel conflict now that the stakes are even higher.  Situations from childhood can continue to play out and often spouses of those children get involved. 
  3. Conflict avoidance and other dysfunction
    Most families have at least some dysfunction.  Denial is a common family problem.  What conflict?  If we don’t see the problems in the family and the family business, we don’t have to deal with them.  Many family businesses fail to develop a clear understanding of conflict and its development.  If we don’t understand where conflict comes from, we are repeatedly surprised by its emergence.  This pain and surprise is avoidable.

Identifying the leading possibilities for family business conflict is only the beginning.  What do you, as a leader in your family business, need to do to prevent it from happening to you?

  1. Set up two clear and identifiable systems.
    We often suffer from a lack of clarity.  What are the roles, definitions and boundaries of each of the two systems?  When we meet or have discussions, the role of each person (family or business) needs to be clear.  Don't allow the two roles to get confused or merged together.  For example, the business needs to run as a meritocracy whereas the family will tend to run in an almost opposite manner.  Each person’s role in each of the systems needs to be clearly defined for them and for the rest of the family.
  2. Work through unresolved family issues.
    Unresolved issues left over from growing up in the family will remain until they are worked through.  Old conflicts may still be operative, especially if they have never been talked about.  The family system and history are powerful forces that do not simply go away.  Many times, families that work together need to go back and revisit things from earlier history that are affecting their relationships today. (This is where my background in family therapy often helps clients.)
  3. Learn and apply a model of conflict development and prevention.
    Why do we act surprised when conflict rears its ugly head?  Unfortunately, most businesses don’t have a clear model of conflict that allows them to head it off. In my work with family businesses, I work to inculcate a clear model of the origins of conflict so that each person in the company is equipped to spot the signs earlier.  As I teach my clients, the best place to prevent conflict is in your own head and thinking.  This is where it tends to originate.  If we get good at recognizing the signs of its emergence, we can cut it off quickly.

Family conflict is painful.  When it occurs within a family business, it can be even more painful and can impact the bottom line of each person involved and the business as a whole.  These organizations need to work deliberately and consistently to prevent and eliminate conflict and its deleterious effects.  There is no time like the present.  If you find yourself in the midst of intense conflict or little, the chances that conflict is coming are high.