Here's how to avoid family business conflicts

There are 5.5 million family-owned businesses in the United States, according to Family Enterprise USA. These companies often unite family members behind a common purpose, but conflicts can arise when professional and personal lives overlap. If you’re involved in a family business, the Minnesota Society of CPAs (MNCPA) offers advice on how to sidestep some of the internal squabbles that can affect such companies.

Groom future leaders

About one-third of family business owners say they have no plans to retire, but since their average age is 51, it seems likely that change is actually looming for many. Succession can be one of the toughest challenges for a family business because of the mix of business and personal issues involved. That’s why it’s important to take a realistic look at the future, decide what kind of leadership will be needed and determine whether that leadership can be nurtured internally or must be hired from outside. Certified Public Accountants (CPAs), who act as trusted business advisers for many small companies, can help you address these issues.

Clarify job responsibilities

Because of the personal ties among employees, family businesses often have a much more informal nature than other companies. That can be an advantage, but it can also have its drawbacks. For example, to avoid confusion or hard feelings around accountability issues and expectations, it’s best to create a detailed set of responsibilities and goals for every position in your organization. It’s also important to hold regular employee reviews to discuss whether employees are meeting expectations. No matter how small your company, formal job descriptions based on defined expectations help clarify each employee’s required contribution. The clarity characteristic of formal job descriptions can go a long way toward preventing misunderstandings around expectations.

Use the formal job description in your employee reviews to help frame your discussions about any improvements you would like to see and challenges you believe the employee must overcome. A formal job description helps to establish that any constructive criticism an employee receives is not personal. If job termination becomes necessary, a job description and documented job reviews can help you focus on objective business reasons for an employee’s termination.

Speak up sooner rather than later

It’s often tempting to avoid business conflicts—especially when they involve family members—but it’s best to address them when they occur. By tackling a problem directly, you avoid letting it deteriorate to the point where it may be impossible to resolve. As we’ve mentioned, regular employee reviews can help, but it’s also a good idea to talk about glitches immediately. Focus on alternative approaches and solutions that will guard against a repetition of unfavorable outcomes. Clearly:

• state the problem

• explain how it affects the business or other employees

• spell out what changes are needed

• review impending consequences if changes aren’t made

For example, say that a family member habitually fails to turn in all the necessary paperwork regarding certain business transactions. After stating this problem, describe how it forces others to track down the information and do the paperwork themselves or how it causes delays in other processes or departments. Remind the employee that they are responsible for the paperwork and let them know that they may need to stay late or work on a weekend the next time duties are not completed on time. Once again, this focus on business rather than personal issues should minimize some of the conflict in this situation and signal to employees that they are expected to pull their weight in the organization.

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