Common Causes of Family Business Conflict & What to Do About Them.
Family Business Mediation Video No 43. Poor Business Performance.
By Jon Kenfield. Solutionist.
• Business performance, or more likely lack of same, is a common cause of conflict.
• Some family members employed in the business may be underperforming, or actively sabotaging the efforts of their siblings, resulting in poor overall business performance. They then claim protection from a nurturing parent (which is often Mum for sons, or Dad, for daughters) when called to account by the family members employed in the business who are performing.
• Another cause of conflict is when employed family members continue to draw salaries, while non-working family members receive no benefits when profits are low. The sense of entitlement displayed by some individuals who’ve rarely lifted a hand to help the business can be a cause for astonishment in observers.
• Suspicions can flare amongst passive shareholders that the books are being manipulated, despite knowing almost nothing about the business, when there’s a sense of entitlement to certain benefits.
• Ultimately, poor business performance can be used as a substitute battleground to heap blame on siblings / family members, justifiably, or otherwise.
Solution
• Call a family meeting and have the results of the business explained by a non-family, or external, accountant. Don’t baffle with bullshit – present results so they’ll be understandable by interested 12 year olds.
• Get the accounts audited (last resort, unless the business is large and the conflict is serious).
• Provide regular performance reports to upgrade knowledge, explain business issues and manage expectations.
• Explore and mediate the underlying cause of conflict – it’s probably not the business results, they’ve been used as a catalyst.
