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Conflict negotiations are an everyday experience for many family businesses and are especially common in those family businesses where there is not a well-developed management infra-structure.
“Family businesses generally start out with a very informal management system. The loose and informal style of management offers a high degree of flexibility – not of lot of rules, regulations and red tape. There are not many standard polices and practices to get in the way of the entrepreneurial spontaneity associated with start-up family businesses,” suggests leading family business expert Don Schwerzler. “However, many family businesses never evolve beyond this level of management style. It is one of the reasons that only about 30% of family businesses successfully transition to the second generation; only about 12% successfully transition to the third generation; and only about 4% successfully make it to the fourth generation.” Schwerzler has been studying and advising family business entrepreneurs for more than 40 years and is the founder of the Family Business Institute.
The lack of infrastructure becomes problematic to the sustainability of the family business - an informal management structure can actually inhibit the growth and profitability of the business – a kind of glass ceiling that keeps the family business from achieving the true potential of the business. Successful family businesses make the transition from the informal management style to a more formal or professional style of management. Indications that a family business is changing to a more professional management style include:
“We are successful in dealing with family business conflict negotiations because we take a holistic approach,” notes Schwerzler. “We address all three systems so we are able to develop a negotiation strategy that connects all the elements of a family business.” Many family businesses seek help from professionals they know – their CPA, attorney, financial planner, family therapist, etc. But because these professionals are generally only able to address one dimension of the problem, the process generally creates sequential solutions that sometimes do more harm than good. When family businesses contact us for help in dealing with family feuds, conflicts about business strategy or tactics, succession issues, the first step we take is to schedule a Family Business Assessment (FBA). The Assessment can generally be done over a two day period. The process we use when we conduct the FBA enables us to understand the family dynamics and construct reasonable and productive negotiation tactics. Conflict negotiations that work! If you are involved in a family business where every day seems to be a “battleground”, contact us to learn more about our expertise in dealing with family business conflict negotiations -We Can Help! The Family Business Institute and their on-line organization Family Business Experts sponsor the Family Business Help Desk.
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