mgt 4550 - family business management conflict management chapter 4 family business management,...

MGT 4550 - Family Business Management

CONFLICT MANAGEMENT

ChapterChapter 4 4

Family Business Management, Concepts and Practice

by A. Bakr Ibrahim & Willard H. Ellis

Instructor: Dr. Irene Duhaime

Dr. Irene M. Duhaime 2

Class Schedule - Week 4Class 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


Contents 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

Syndromecontinued ….


ContentsContents

…. continued

Conflict Between Other Members of the Family

Conflict between Family and Non-family members

Managing Conflict Other Conflict Resolution Methods


The Traditional Vs. The Behavioral View

Traditional View “..conflict is unhealthy for organizations and

must be avoided” Contemporary or Behavioral View

Functional / Positive innovation, creativity, energy and enhanced

performance Dysfunctional / Negative

must be avoided or managed to minimize damage



Figure 4.1 C onflic t in Fam ily F irm sFam ily Business m anagem ent, Ibrahim & E llis

The

BusinessSystem :R esult-oriented C onflic t

TheFam ilySystem :Em otionallybased.

The Overlap Between the Family and Business Systems



Ambiguity of roles Differences in power and status among

family and non-family members

Hasty and /or unfair succession process

Rivalries among family members

Favorite Son/daughter syndrome…continued



.. 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


Common Sources of Conflict


Rivalries between offspring

Conflict between other members of the

family

Conflict between family and non-family

members



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



Value Difference Between Generations Differences in values, vision and management

styles

Leads to increased tension



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



Mechanisms to Resolve Conflict Succession plan Third-party intervention Peacemaker Wise man/woman in the family Consultant/lawyer, accountant


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.


Rivalries Between Offspring:

Mechanisms to Resolve ConflictSuccession planCEO interventionJob descriptionsIntroducing professional managementConfrontation meetingCommunication - weekly supperRestructuring - creating zone of comfort/territories



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



Mechanisms to Resolve Conflict Job descriptions CEO intervention Confrontation meeting Code of conduct Communication - weekly supper



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



Mechanisms to Resolve Conflict Clear policies concerning career development

Job descriptions

Communications

Introducing professional management


Managing Conflict

Setting Clear Guidelines Jurisdiction, compensation, career

development, code of conduct, objectives, performance assessment criteria

Remove ambiguity

Set clear expectations


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


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


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


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


Managing Conflict

Introducing Professional Management Non-family member

Provide objectivity

Encourage professional attitudes in family

members


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



Compromise win-win situations

middle ground over extremes

parties make concessions

may not be the ‘best’ solution



Forcing Use of formal or positional authority Issuing of directives Win-lose situation Tendency towards dominance and cohesion Often creates negative feelings



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


Cases Cases

CONFLICT MANAGEMENT IN FAMILY BUSINESSES Cases:

Northern Construction Inc., p.203 FBM

Questions 9, 24, 70, 77, 85, 86,90 FBAB


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?


Question 24

How does a woman deal with patronizing behavior, including a lower salary


Question 59

What guidelines can you offer to help siblings or cousins working together?


Question 70

Are there some positive benefits to a dispute among family members?

What are the best methods of conflict resolution?


Question 77

If trouble brews, should you seek outside help?

And from whom?


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?


Question 86

How can you handle theft or substance abuse in a family business?


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?


Class Schedule - Class Schedule - Next WeekNext 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

mgt 4550 - family business management conflict management chapter 4 family business management,...

Documents

managing conflict

nonfamily members

irene duhaime slide

duhaime6 causes of conflict

duhaime7 causes of conflict

duhaime8 causes of conflict

damage slide

conflict resolution