Family Feuds in the Workplace: How to Resolve Them

Posted on in Growth Strategies

By Richard Davis, HirePowerHR

When I was 8 years old I began working in our family shoe retail and repair business that my grandfather had started in the 1950s. Sometime in the 1960s my father and an uncle split off the business into two different businesses and eventually bought out my grandfather. Later, my grandfather sued my dad and uncle, stating that he had not received a fair deal. Knowing my dad, I can’t imagine him doing anything that was non-transparent and unfair.

The net effect of the battle between father and sons was an estrangement that lasted for almost six years and dozens of missed opportunities for family unity. Sadly, my grandfather did not live very long after all the axes were buried.

Inevitable Conflict

Conflict is inevitable in business. In a family business, the conflict can become even more emotional. One of the most interesting family business conflicts I’ve come across was between Adolf and Rudolf Dassler. The Dassler Brothers Sports Shoe Company is not well known in our generation, but the names of the competing brands that came out of a simple misunderstanding between brothers are. Ever hear of Puma and Adidas?

The HME industry has had its fair share of family feuds and conflicts. I hesitate being specific, so I will provide some “hypotheticals” to illustrate the good and not so good ways in which family feuds and conflict can be resolved or avoided.

Scenario #1

Two brothers start an HME business and begin growing a nice company. As years pass, the business is very successful, and some of the children of each brother start to work in the business. With the success, potential buyers start appearing, and the valuation is too good to pass up for the brothers. They see selling the business as the best way to realize the full value they have created.

Conflict number 1: The brothers have differing views of the level of contribution the family members have had in helping build the business.

Conflict number 2: Each family member feels they should have an equal portion in the proceeds from the sale, regardless of the level of contribution.

Scenario #2

Three family members start a business, and as each takes on a different level of responsibility, the business grows and makes money. Over time, one family member begins to work and contribute less as more employees are hired and the business became more and more self-sufficient.

Conflict number 1: Resentment starts to surface as family members begin to question the commitment of other family members.

Conflict number 2: The more active family members have to pick up the slack from the less active family member, but the financial distribution to family members remains equal.

Scenario #3

Several family members start a business, and it becomes successful. Although there has always been an unwritten agreement about fiscal management, one family member begins to spend company money on contributions to charitable organizations, season tickets to sporting events and expensive furniture and fixtures for the office. Nothing is said out loud, but much is said in private to spouses and friends.

Conflict number 1: Other family members start to question the honesty and integrity of the spendthrift family member.

Conflict number 2: The poor fiscal management puts the sustainability of the business in jeopardy.

Resolving the Feuds

In each of these scenarios, prior proper planning could have prevented or diminished the impact of the conflict.

In the first example, the conflict could have been eliminated or reduced if the brothers developed a talent management strategy related to relatives working in the business. They should have evaluated the potential for each family member to contribute and created clear and concise job descriptions -- even for family members. The brothers should also have clearly outlined the exit strategy, created legal documents to be followed in the event of a sale and clearly communicated to all family members well before the sale.

In the second example, the family members should have clearly established the responsibilities each would assume and the expectations going forward. Within in this plan, it should have been clearly communicated that issues of concern should be addressed immediately to prevent resentment from building. Regular meetings to openly discuss such issues should have been part of the business from the beginning with full transparency and candor.

In the third example, a sound and specific financial management plan should have been created. Aside from expenditures to run and manage the business, no family members should be able to obligate the company financially, and no business funds should be used for non-business purposes without the consent of all vested family members.

Bottom Line: A Family Business IS a Business

Many family business start with a great idea and with the mindset, “Hey, we are family and can always trust and rely on each other.” It sounds good, but a family business should be no different than any other business. A clearly communicated plan with legal documents should be created at the beginning to anticipate, as much as possible, any potential scenario that may arise. Roles and responsibilities of each family member must be established up front and expectations clearly communicated.

The six P’s are Prior Proper Planning Prevents Poor Performance. With a family business, it is four P’s and two C’s: Prior Proper Planning Prevents Conflict and Confusion.

About the Author

Richard Davis is human resources consultant with HirePowerHR, which he founded in 1992 to focus on talent management and human resource consulting, and management training and development. He has more than 30 years of health care experience in executive management and consulting.