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
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
2
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
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Contents
…. 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
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The Traditional Vs. The
Behavioral View
 Traditional View

“..conflict is unhealthy for organizations and
must be avoided”
 Contemporary

Functional / Positive


or Behavioral View
innovation, creativity, energy and enhanced
performance
Dysfunctional / Negative

must be avoided or managed to minimize damage
Dr. Irene M. Duhaime
5
Causes of Conflict in the
Family Business
The Overlap Between the Family and Business Systems
The
Business
System:
Resultoriented
Conflict
The
Family
System:
Emotionally
based.
Figure 4.1 Conflict in Family Firms
Family Business management, Ibrahim & Ellis
Dr. Irene M. Duhaime
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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
 Favorite
among family members
Son/daughter syndrome
…continued
Dr. Irene M. Duhaime
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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
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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
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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
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Father-Son/Daughter
Rivalry
 Value
Difference Between Generations

Differences in values, vision and management
styles

Leads to increased tension
Dr. Irene M. Duhaime
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Managing Conflict
 Introducing
Professional Management

Non-family member

Provide objectivity

Encourage professional attitudes in family
members
Dr. Irene M. Duhaime
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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
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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
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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
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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
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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
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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
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Question 24
How does a woman deal with
patronizing behavior, including a lower
salary
Dr. Irene M. Duhaime
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Question 59
What guidelines can you offer to help
siblings or cousins working together?
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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
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Question 77
If trouble brews, should you seek outside
help?
And from whom?
Dr. Irene M. Duhaime
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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
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Question 86
How can you handle theft or substance
abuse in a family business?
Dr. Irene M. Duhaime
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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
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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
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