Monday, December 22, 2014

An exploration of family conflict on the firm

In the article Conflicts in Family Firms: The Good and the Bad, authors D’Lisa McKee, Timothy M. Madden, Franz W. Kellermanns and Kimberly A. Eddleston make the point that while managing the multitude of family relationships makes conflict particularly pervasive in family firms, not all types of conflict are inherently detrimental. Published in The SAGE Handbook of Family Business, 2014, the authors’ fundamental argument is that it’s simply not accurate to say that mitigating any and all types of conflict is in the best interest of a firm. Since conflict can at times improve family firms’ performance, they go on to explain the three general types of conflict and how they can manifest themselves in desirable or undesirable ways, based on the type of conflict, its frequency and its intensity.
                  After an overview of the three types of conflict (relationship conflict, cognitive conflict and process conflict), the authors address mechanisms for coping and then go on to discuss common outcomes as a result of coping with conflict. Noting that empirical research in this particular area of family business is still in its infancy, the authors must refer to general management research on interpersonal conflict in order to illustrate several points.
They outline a few conclusions which might be relevant for advisors dealing with conflict in family firms, such as “process conflict should enhance the performance of family businesses but its limitations suggest that low to moderate levels of process conflict would be most beneficial to family firm performance.”
                  The article outlines the five main strategies for managing conflict, including avoiding; contending; compromising; collaborating; and using third-party intervention, and also addresses some family firm conflict antecedents, moderators and outcomes.
Perhaps the most useful section in the article outlines a few concrete, overall recommendations for practitioners, summarized as follows:

·       conflict needs to be viewed as part of the overall governance of the organization
·       governance contracts among family members should include conflict-related clauses to heighten the awareness of the involved family members and family branches
·       any immediate and open negative conflict should be addressed within 48 hours of the occurrence
·       a board or regular shareholder meeting with conflict-related authority can be beneficial
·       practice shows that it is beneficial to elect a ‘go to’ person on a yearly basis who is in charge of addressing critical issues among family members and serves as a first regulating authority
·       the establishment of ‘family days,’ meetings scheduled at regular intervals, can be a useful tool in regulating conflict
·       governance mechanisms need to anticipate future changes in the family structure so that they can address the complexity of the family, its future structures and have provisions to deal with those changes (sometimes called anticipatory governance)
·       conflict that has been brewing for years or is of ‘murky’ origin may benefit from the use of an independent third party

               Ultimately, despite the little empirical research on the subject, we know that conflict and tensions can impact interpersonal relationships, firm performance, household performance and socio-emotional wealth. While this article is interesting and somewhat informative about family conflict, it may be fairly redundant for professional advisors who are already fairly educated or experienced in this area, and may provide new information only to those who have little or no knowledge of the three types of conflict or the strategies to manage them.


  1. I believe that a Family Enterprise would be stronger if the individuals involved could sustain differences of opinion in order to arrive at what is best for the the business, family and shareholders. This requires people to lean into debates with curiosity and conviction vs. can I win the argument or can I be right. This is much easier said than done. A good facilitator can be a huge factor in helping a family enterprise grow this skill set.