Avoiding Conflict Will Only Hurt Your Family Business

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Avoid reaching a "cliff event" by recognizing fake harmony in your family business and taking steps to work it out together.

One of our clients has a sign up in their headquarters that reads, “As far as everyone knows, we’re a big happy family.” It’s a reminder not only of how they want the world to see them, but how they want to see themselves, no matter what the reality is, a tacit acknowledgement that no family is perfect.

When people think about conflict and family business, they tend to think about the “fireworks” kind of conflict we see on the front pages of the newspaper or depicted in popular television shows. But far more common is the exact opposite, what we call “fake harmony,” in which families are so afraid of conflict that they avoid uncomfortable discussions of any kind.

Why Fake Harmony Is So Destructive

Disagreement in a family business is natural over time. As a family grows, interests diverge and individual family member relationships with the business can change. It’s healthy and expected for individual owners (or future owners) to have different perspectives, and the desire to quash those perspectives, rather than risk rocking the boat with differences of opinion, is often counterproductive.

If your family isn’t discussing any competing ideas, you’re likely avoiding conversations about important issues. In our experience, fake harmony can be far more damaging than fireworks, because it causes families to avoid making difficult, but important, decisions about the business or the family.

Fake harmony can also create resentment in the family. People don’t feel like they can express their interests or opinions for fear of creating conflict. Issues may be unspoken, but that doesn’t mean they’re gone.

Fake harmony also stifles innovation. Families can be cornucopias of great ideas, but when individuals don’t share ideas because they are afraid to “rock the boat,” businesses and family owners miss opportunities to innovate.

Fake harmony also delays generational transitions by limiting cross-generational conversations and collaboration. Absent those conversations, the senior generation may not learn to trust the junior generation and vice versa. And the junior generation may not understand the senior generation’s intentions and approach, growing frustrated with the pace of change.

Perhaps most importantly, fake harmony can lead to what we call a “cliff event” — an unaddressed conflict that builds and builds over time until it erupts into far more serious and complex arguments. Cliff events can tear at the fabric of a family and limit the family’s ability to make important decisions together.

That’s not to say that fake harmony is irrational; most families have long memories. A different opinion received poorly or in the wrong context can explode into harmful conflict. If you disrupt family harmony, your family may hold that against you for the rest of your life.

So even if you recognize that fake harmony is holding your family business back, you need to tread carefully. You don’t have to wade in with a laundry list of grievances. Strategic avoidance can be a sensible temporary negotiation tactic as you wait until the right time to bring up a tough topic.

Often, the cliff event that triggers outright conflict after a long period of fake harmony is seemingly small on its own. But the months or years of keeping quiet over other disagreements are baked into that moment, too. So, when it explodes, it can be hard to undo the damage. And when that happens, months, years, or even decades of progress as a family and an owner group can be undone. For example, one family owner we know (all identifiable details have been changed) nursed wounds from decisions by the other owners (his siblings) to wind down a favorite R&D effort and hire the “wrong” non-family CEO, but he said nothing for months. His anger “irrationally” (accordingly to his siblings) boiled over during a seemingly innocuous discussion about a board meeting date, leading to conflict that ultimately caused the business to miss out on a lucrative acquisition opportunity as they were rehashing other old wounds.

Of course, what constitutes excessive conflict (as opposed to constructive disagreement) depends on family culture and personal interpretation. Some families can more easily tolerate conflict than others, and the extent to which people will stoically put aside their personal interests to support the common cause also varies. But the signs of fake harmony are common, regardless of your family culture:

Signs of Fake Harmony

  • Opinions aren’t expressed.
  • Constructive feedback is avoided.
  • Debate is suppressed.
  • Back-channel conversations are the norm.

Tools for Overcoming Fake Harmony

  • Start with easier issues.
  • Use surveys to uncover opinions anonymously.
  • Consider facilitated conversations.
  • Strengthen transparency.
  • Set the right standard.

To read the full article, click here.

Originally published on HBR.org, 26 September 2022.

Summary: Disagreement in a family business is natural over time. As a family grows, interests diverge and individual family members’ relationships with the business can change. It’s healthy and expected for individual owners (or future owners) to have difference perspectives. So, the desire to quash those perspectives, rather than risk rocking the boat with differences of opinion, is often counterproductive. If your family isn’t discussing any competing ideas, you’re likely avoiding conversations about important issues. This fake harmony can be far more damaging than the fireworks type of conflict, because it causes families to avoid making difficult, but important, decisions about the business or the family. This article discusses the signs of fake harmony that you should watch for, as well as tools for overcoming it.

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