FAMILY DYNAMICS / GOVERNANCE

Family Disagreements

Matthew Baran

March 25, 2022

Disagreements. We all have them.

Some small and insignificant.

Others as WIDE and DEEP as the Grand Canyon.

When disagreements happen in a family business, they can have devastating life-long effects on the family, the business, and the employees.

Operating a generational family business can become complicated because there are more family members involved as the business grows.

As a family business transfers through generations… from founders to children, to children and cousins, bloodline to in-laws… it opens the door to many more opposing views which inevitably can lead to disagreements.

If those doors had signs they might read like this:

• Family values that grew apart
• Political differences without civil debate
• Religious beliefs clash
• Favoritism that alienates

Thinking about how to prevent an issue that could tear your business and family’s livelihood apart is a tough exercise that many often avoid.

Perhaps the business was started by or transferred easily to siblings who naturally knew how to get along and work through issues. Assuming the next generation will follow their lead, they did not set up the parameters to deal with disagreements.

Let’s look at two business examples:

Business 1

A business (with no plan for disagreements) is started by a single individual. When the owner exits, they pass the business on to two children. One has been working in the business since high school. The other had no interest ever. Now they must make decisions together and they could not be farther apart in their views and future plans. There is no mechanism in place to handle the major disagreements that arise. The business stalls, key employees leave, financials suffer and the drama spills over to the extended family. The dynamics force them to sell under less-than-ideal circumstances to end the disagreements. Everyone loses.

Business 2

A business (WITH a plan for disagreements) is started by a single individual. They also passed the business onto two children – one working in the business since high school and the other never inclined to do so. But that is where the similarities in these stories end. This founder had a governance structure and a small board of trusted advisors in place business to help facilitate decisions and the proper mechanisms in place to handle a major disagreement, should one take place.

Where do these disagreements come from?

Love, Power and Money are at the center of most family business disagreements.

• Who oversees the business day to day?
• Does the IN-business sibling need to run everything by the OUT-of-business sibling?
• How much is the business worth?

If ownership transfers as 50/50 with no resolution mechanisms, it could be disastrous for both the family and the business. Business Owners…THIS is an IMPORTANT EXERCISE. Take time to prepare what transition looks like, so it can be done in the best interest of the WHOLE family.

Nothing is foolproof, and you cannot prepare for every possible outcome. However, by thinking ahead and taking some simple steps you can prepare for the most common types of disagreements.

It can be the difference between your business continuing to thrive OR having to close its doors.

And more importantly, it can mean the difference between enjoying the holidays as a family or having a wedge the size of the Grand Canyon between those you love.

Need help facilitating a disagreement or setting up the structure to facilitate harmony? Schedule a session with me and we can begin to bridge those differences.