1. 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

2. 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

3. 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

4. Contents Conflict Between Other Members of the Family
…. continued
Conflict Between Other Members of the Family
Conflict between Family and Non-family members
Managing Conflict
Other Conflict Resolution Methods
Dr. Irene M. Duhaime

5. The Traditional Vs. The Behavioral View
Traditional View
“..conflict is unhealthy for organizations and must be avoided”
Contemporary or Behavioral View
Functional / Positive
innovation, creativity, energy and enhanced performance
Dysfunctional / Negative
must be avoided or managed to minimize damage
Dr. Irene M. Duhaime

6. Causes of Conflict in the Family Business
The Overlap Between the Family and Business Systems
Dr. Irene M. Duhaime

7. 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 among family members
Favorite Son/daughter syndrome
…continued
Dr. Irene M. Duhaime

8. 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

9. 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

10. Father-Son/Daughter Rivalry
Founder’s 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

11. Father-Son/Daughter Rivalry
Value Difference Between Generations
Differences in values, vision and management styles
Leads to increased tension
Dr. Irene M. Duhaime

12. 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 father’s feelings
Prevent father from playing off against other offspring
Source: Levinson: “Conflicts that Plague the Family Business”, Harvard Business Review
Dr. Irene M. Duhaime

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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 non-family members
Dr. Irene M. Duhaime

25. Managing Conflict Introducing Professional Management
Non-family member
Provide objectivity
Encourage professional attitudes in family members
Dr. Irene M. Duhaime

26. 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

27. 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

28. 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

29. 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

30. 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

31. 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

32. Question 24
How does a woman deal with patronizing behavior, including a lower salary
Dr. Irene M. Duhaime

33. Question 59
What guidelines can you offer to help siblings or cousins working together?
Dr. Irene M. Duhaime

34. 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

35. Question 77 If trouble brews, should you seek outside help?
And from whom?
Dr. Irene M. Duhaime

36. Question 85
Can power struggles between siblings and other family factions create a bad business climate?
How can such struggles be defused so they don’t undermine the business?
Dr. Irene M. Duhaime

37. Question 86
How can you handle theft or substance abuse in a family business?
Dr. Irene M. Duhaime

38. 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 culture’s good points and change its negative ones?
Dr. Irene M. Duhaime

39. Class Schedule - Next Week
SUCCESSION - SENIOR GENERATION’S 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