Managing Conflict in a Family-Owned Business - Part Two

The structure of the matter.
Part two of two 

Key Takeaways:

• The B.O.S.S. concept formalizes how we generate what's right for the Business, for Others, for our Self and for Stakeholders.
• The approach helps develop collaboration, team skills and common success.
• Regular family meetings keep issues from growing into problems.
• A family code of conduct helps prepare and formalize key ground rules to keep everyone on track as individuals, as a family and as a business.

Part 1 of Managing Conflict in a Family-Owned Business discusses how important it is to raise issues, prepare succession plans and create a common family vision. This form and structure help unite family members in a superordinate goal.

Here I introduce other specific methods to bring structure to family-business issues and to prevent conflict.

Who's the B.O.S.S.?
The B.O.S.S. concept is a way to remember what the family wants to generate for the...

Business

Others (and what they want)

Self (what you want for yourself)

Stakeholder (including others who share in the business)

READER NOTE: In keeping with the "O" in B.O.S.S., I ask, "Is there a particular topic or subject that you would like discussed?" Please contact me. Share your preferences and suggestions for articles, ideas and discussions. I want to provide future topics that would interest and help you.

To manage issues and prevent problems, the family carefully considers what must be done to take care of the "B" (Business). Most family businesses recognize this intuitively. It's just common sense.

What may be less intuitive is recognizing that in order to prevent issues from becoming problems, you must identify what the "O" (Others) wants. That means "What do I want for you based upon what you say you want?" Every family member must understand that they have a commitment to each other's success. This is what defines a team with people who consciously help each other succeed. In this way, kything prayers and the "O" in B.O.S.S. mean the same thing.

Being aware of others unleashes energy because there is psychological engagement within the family. It is strikingly portrayed by author Mihaly Csikszentmihalyi. I summarized his concept with a few quotes taken from his book Finding Flow:

• "An optimal family system is complex in that it encourages the unique individual development of its members while uniting them in a web of effective ties."
• "A group of people is kept together by two kinds of energy - material energy provided by food, warmth, physical care and money, and the psychic energy of people investing attention in each other's goals."
• "When people pay attention to each other or to the same activity together, the chances of finding flow, binding the family, increase."
• "Only when there is harmony between the goals of the participants, when everyone is investing psychic energy into a joint goal, does being together become enjoyable."

Csikszentmihalyi emphasizes the importance of putting psychic energy into families. He is talking about regular families, not those involved in business or wealth. I would suggest that the need for this engagement is even greater for business families where strained relationships can produce even greater consequences. The point is that good things happen when people are committed to each other's success.

The first "S" (Self) in B.O.S.S. represents what you want for yourself. With the family as a team, individuals think about what they want for themselves in concert with what others want for themselves and aligned with what they all want for each other. This puts power into the common family vision because family members reinforce the common good. Each trusts that by contributing during their turn, they are appreciated and the trust is returned when others respond as their turns come.

The second "S" stands for the stakeholders. These stakeholders may be nonfamily employees, other family members not engaged in the business, vendors, suppliers and customers. B.O.S.S. thinking helps create win-win rather than win-lose decisions. It helps promote the common good to help the family and their business become vision driven rather than problem focused.

Develop collaborative team skills
An excellent way to prevent conflict is to strengthen family communications using Collaborative Team Skills. This highly successful program created by Sherod Miller helps families successfully manage their differences.

The program helps people learn how to express feelings and wants. When these deep needs go unexpressed, communication breaks down (see the Speck of Dust Theory referred to in Part 1). I consider listening skills to be the most important way to promote understanding within the family.

Proper listening requires knowing how to respond to different communication styles, map an issue and actively problem solve. Conflict often arises because people don't listen carefully, or they respond poorly. A few simple techniques can sidestep a lot of misunderstanding.

Hold regular family meetings
In his book Family Business (3rd Edition), Ernesto Poza promotes family meetings. He states that when family businesses have regular family meetings, they become more successful. This promise of greater success is reason enough to meet regularly as a family.

Successful family-owned businesses typically hold three types of meetings:

1. Shareholder and owner meetings that include only those members
2. Meetings designed for employees and family-member stakeholders
3. Family-only meetings that bring together the entire family, including spouses and those not active in the business

Each type of meeting has its own dynamic, purpose and value. Family meetings, in particular, help manage the boundary between family and business. This is where so many potential conflicts can be discussed and resolved. Family meetings build the emotional equity of the family (the psychic energy ofFinding Flow) while simultaneously building the equity of the business.

Here are a few of the many ways to build emotional equity in the family:

• Establish and celebrate family rituals and traditions
• Regularly spend informal time with each other outside of the business
• Involve adult children and grandchildren in family-oriented services and philanthropic projects

Prepare a family code of conduct
Issues raised and resolved in family meetings can be restated as part of a family participation plan or code of conduct. Essentially, this is like a set of ground rules established before a baseball game. Even though the teams play every day during the season, opposing managers get together at home plate to review the ground rules. This is not a ritual, but a practice that helps the two sides avoid a dispute in the middle of the game about what is fair and foul, correct or incorrect.

Too many family-owned businesses regularly play the game of business without having or regularly reviewing their own sets of ground rules. Or they assume the rules are unchanged and fail to keep them current.

I use this outline with my clients to guide them to their own family participation plans or codes of conduct:

• Eligibility
• Entry
• Summer employment
• Intern programs
• Nonfamily executives
• Full-time employees
• Career planning
• Application process
• Coaching
• Poor performance and termination
• Conduct and protocol
• Compensation

Discomfort around touchy issues is natural in every family and family business. Holding regular family meetings and producing a family participation plan or code of conduct can prevent many of these issues from becoming problems. My mantra for clients is: "It's always easier to prevent a problem than to try to fix one." Conflicts become painful only if ignored.