How to discuss your differences in a family business

Disagreements on operational matters need not be a problem for a family agribusiness. On the contrary, if members work together to solve their problems, the solutions will be that much better, says Trevor Dickinson.

How to discuss your differences in a family business
On reaching a deadlock, some family businesses strive for consensus through compromise; others defer to the family member chiefly responsible.
Photo: FW Archive
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Conflict is built into our family and business lives. While it tends to be viewed negatively, it can provide opportunities for constructive change. It becomes a problem when it is avoided at all costs and when it becomes personalised and polarised.

Some families have developed effective and novel methods for handling day-to-day business conflicts. Consider the Mitchell family, for example.

The Mitchell family has a rule that no one can speak out of turn at family council meetings; the person who has the floor must finish his or her statement before another family member can begin to speak.

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During one council discussion about family privileges, emotions were running high and family members were constantly interrupting one another.

Finally, Gavin, the youngest of three sons, suggested that each speaker stand and that another should not be permitted to take the floor until the first speaker sat down. The family adopted the rule. To prevent prolonged speeches, they also agreed to a time limit on each person’s comments.

When one family member is angry at another’s behaviour, the two should try to resolve the issue themselves and not lobby other family members to take sides.

The Mitchell family learnt the hard way about the risks of relying on others for help in settling an issue. Whenever one of the sons had a problem with a brother, he would discuss it with either his father or his mother.

Usually, the son would be relieved, but the parent would become upset and the problem would never get resolved.

The Mitchell brothers have learnt that when any of them take issue with another brother’s business decisions or has a problem with his behaviour, the two get together and discuss their feelings directly, leaving their parents out of it. If after several hours they are unable to resolve the problem, they call in an old friend whom they trust and who has agreed to act as a facilitator.

Achieving Consensus
Another helpful rule for avoiding polarisation is that family business disagreements should be dealt with at work, where they are most likely to be resolved.

All too often, business partners bring their problems with siblings or parents at work, home to their spouses. Talking over the issues may help them to blow off steam, but it’s unlikely to solve the problem and the spouse may be left with angry, unresolved feelings, that aggravate in-law tensions and polarise families.

Two sons who run their father’s packaging business have worked out another way of promoting consensus on important decisions. From the beginning of their collaboration, Kobus and Jaco Boshoff felt that when one of them expressed a contrarian view, it was essential for the other to listen.

Kobus runs the packaging operation, and Jaco is in charge of the dispatch operation. On one occasion, Jaco objected to the selection of packaging that Kobus planned to buy. Unable to reach an agreement, they invoked the rule: “A strong vote against something will be listened to.”

Kobus went back to the drawing board and gave more thought to the selection of packaging. That gave Jaco time to examine his reluctance to go ahead with the packaging and perhaps be more flexible about it.

Both came back to the negotiations in a better frame of mind: Kobus had modified the selection of packaging to meet some of Jaco’s reservations about it, and Jaco was able to articulate his misgivings.

Listening to each other’s objections and taking time before making a decision had worked well for the two brothers.

They decided to go ahead with the new packaging, but on a smaller, ‘trial’ scale and with some of Jaco’s suggested variations.

Build the foundation together
While rules are helpful for resolving deadlocks, long-term co-operation depends upon agreement on fundamentals. To avoid arguments, members of a family business need to take the following actions:
1. Agree on values, mission and basic policies.
2. Put job descriptions in writing and clarify leadership responsibilities.
3. Establish regular performance reviews.
4. Set up structures enabling constituencies such as minority shareholders and non-participating family members to be heard.

Take the case of Armand and Chantelle, a brother-sister team who took over their father’s fruit and vegetable distribution company.

Neither was clear about the company’s focus. So during a family retreat, they clarified their values and developed a mission statement based on these.

They were then able to formulate policies and procedures to guide their work together. One policy they agreed on was that the company would sell to distributors, as well as to large companies (defined according to gross sales), that bought fruit and vegetables directly.

Now, whenever a question arises about where the company’s marketing efforts will be concentrated, Chantelle and Armand refer back to this original policy decision.

For example, they recently declined to sell their products to a mid-sized company because its sales fell outside their specifications.

In another family agribusiness, the three sibling owners are very clear about their roles and responsibilities. Each makes decisions for his or her own division within the mission and strategic plan they have developed together for the firm. If one believes that a project may not be consistent with the plan or it affects other divisions, the management team meets and votes on how to resolve the issue.

Resolving Impasses
Family agribusinesses that have clearly defined roles for family members may decide that when there is a deadlock, they will defer to the person who has primary responsibility for the activity.

Other family firms in which relatives all have clearly defined roles and responsibilities may prefer that major decisions be taken by consensus.

Since the family members in these firms usually work together closely, they are often able to build a consensus long before a management meeting is held and a vote taken.

So, what happens when consensus cannot be reached?

Families who work out specific rules for dealing with deadlocks in advance will have an easier time resolving them when they do occur.

In the aforementioned examples, all the participants clearly felt that the talents and skills of other family members were essential to the business as a whole. This mutual respect goes a long way towards building the commitment required to resolve disputes.

Eight principles for breaking deadlocks
Families who work together to develop methods for addressing business conflicts find they can turn their differing viewpoints into a force for constructive change. Setting rules can help families resolve impasses over major decisions.

Some of these rules could include the following mission statements and/or principles:

1. We will remain true to our agreed-upon mission, philosophy and values of our family business.
2. We will use the policy and procedures that we have established to guide us to resolve disagreements.
3. When questions arise about our growth and development as a family business, we will refer to our strategic plan.
4. In policy disagreements, we will strive to achieve consensus. If all else fails, a unanimous vote will be required to decide the issue.
5. If we cannot achieve unanimity, we will hire a facilitator.
6. Disputes over procedural matters such as screening of job candidates or collection of overdue accounts will be decided by majority vote.
7. Family members who have conflicts will deal with the problems between themselves, and
not through others such as parents, spouses, or family and non-family employees.
8. We will focus on what is best for the business, rather than for any individual.

Trevor Dickinson is CEO of Family Legacies, a family business consulting company.