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Relationships And Dynamics

Family ties can equal family tension

Family and business can be two very different and conflicting systems at work.

With family relationships being of paramount importance to the long-term success of the business, emotional connections bring an added layer of complexity to the boardroom meaning that conflict can arise for a whole host of different reasons. From feelings of resentment or entitlement, personality clashes, or disagreements over whether to invest in the business or take dividends, the stress placed on family relationships can be the source of endless issues in the boardroom.

Family tension arising from any source can make a family business difficult to manage and restrict its growth if it is not managed correctly. Indeed, a breakdown in communication within the family can result in time and effort being wasted in managing relationships rather than focussing on the business and family wealth.

How do you avoid tension building in your family business?

It is important to ensure you communicate effectively. By agreeing and implementing formal policies and written frameworks from the outset, tensions will be alleviated before they can develop into an issue.

Some ways in which you can formalise communication within your family business include:

  • Shareholders Agreements – A contract between the owners of a company that defines their roles, rights and obligations as shareholders in the company. This document will protect an individual’s interest in a company and create rules for how a business will deal with any disputes between shareholders.
  • Family Councils – A governance system that is the strategic and organisational planning arm for the whole family. Relevant for any size of business, meetings will articulate values, formulate direction and policy, and oil the wheels of family communication.
  • Agreeing a process for settling disputes before they occur – it is important to deal with small disagreements and grievances early before they develop into a more significant issue.

Take some time to consider your business and family dynamics, and identify where tension is most likely to arise. For example:

  • Does one family (or family member) have more control than others?
  • Which family members are involved in the business and who else might like to be?
  • Are any other spouses involved in the business?
  • What is the wealth of family members not working in the business? Could tension be building up if the family business is doing well and they aren’t involved?

It is rare to come across a business where conflict never happens but in family businesses, emotional factors are almost always part of the issue. Bringing in independent advisers can help you manage this process and we’d be delighted to help if you require any further information or advice on the topics covered in this article. Please contact your local office of Family Business Connect advisers for support.

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