Whether at a family, board, management, or organizational level, conflict is a daily reality in every setting. And, for family firms, a host of idiosyncratic factors exacerbate the likelihood of conflict, driven by complex and interwoven relationships, family involvement in business activities, non-economic motivations such as family power, and the intertwined evolution of family, business, and ownership cycles.
Understanding conflict in family businesses is a complex but essential task, and to help practitioners navigate these waters, I recently collaborated with Marco Mismetti, assistant professor at the House of Innovation at the Stockholm School of Economics, Barbara Del Bosco from the University of Milano-Bicocca, and Cristina Bettinelli from the University of Bergamo, to create a simple diagnostic tool for executives to better understand the nature, catalysts, and potential consequences of conflict within their firms.
Integrating perspectives from family business, organizational, management, psychology, and political science literature, as well as practitioner expertise, this framework provides a robust conceptualization of conflict dynamics in the unique family business setting. In this article, extracting key findings from our research, I present tangible next steps to help executives identify and successfully navigate conflict.
Conflict is not bad per se; it cannot be eliminated, but it can be understood and managed. My coauthors and I developed a structured lens for examining conflict, accompanied by illustrative cases that help us understand how conflicts can originate and evolve into crises affecting family relations and business performance.
This framework is based on six fundamental questions:
Is this conflict dyadic, in that it stems from a conflict between two people?
This could relate to siblings, a family and non-family member, or two non-family members, such as directors, managers, or employees. When conflicts involve more than two individuals, the distinction between intragroup and intergroup conflict becomes crucial for understanding how best to navigate the conflict. Intragroup conflict refers to disputes that occur within the same group or team, such as within a particular department or among majority shareholders. Within the family, conflicts may arise between siblings, parents, heirs, cousins, or even extended non-blood family members. Intergroup conflict refers to conflict between two different groups, which in family firms, might refer to majority and minority shareholders. A common example is conflict between family managers and other organizational members, often driven by different goals and interests.
Is it a breakdown of a relationship? Task-driven? Or down to process?
Relationship conflict is generally defined as ‘an awareness of interpersonal incompatibilities that includes affective components such as feeling tension and friction’. This often leads to negative emotions and affective components such as suspicion, annoyance, worry, and anger. It also fosters perceptions of interpersonal resentment, aversion, and hostility. There is a broad agreement in the literature that this type of conflict is most harmful to business performance. Task conflict, however, referring to the disagreements about the content of the tasks being performed, including different viewpoints, ideas, and opinions, can at times be beneficial as it can improve decision-making by generating new insights and diverse perspectives. On the other hand, it can prolong decision-making and reduce agility, missing the chance to exploit new opportunities, which is a hallmark of many family firms.
Is the conflict happening at a family level? Is it generational? Board level? Or, organizational?
This distinction is particularly valuable because it helps identify where conflict occurs while considering the unique context of conflict in family firms. For example, a task conflict between two family members may occur during a board meeting, while a conflict that originates in the family domain may manifest not only in the workplace but also in more personal settings, such as the home. Each situation has different implications for how the conflict is managed and resolved. In family firms, scholars have identified key contexts in which conflict is likely to occur, such as family, board, and management meetings. These settings provide opportunities for actors to communicate and interact, potentially triggering conflict. Understanding where conflict occurs allows for a deeper analysis of its underlying dynamics and causes, while recognizing the different loci and their specific characteristics is critical for effective conflict management in family businesses. By fostering open communication and adopting tailored approaches based on the locus of conflict, family businesses can turn potential conflict into a catalyst for positive organizational outcomes.
These insights help identify the catalyst for conflict, often shaped by a complex interplay of power dynamics, personal interests, and parental authority.
What is the motive of the conflict?
Understanding the origins of conflict is critical to improving our ability to manage and prevent destructive conflict while fostering productive discussion. The “why” of a conflict delves into its nature and seeks to uncover its underlying causes. For example, in family businesses, the roots of conflict are often deeply anchored in the past, stemming from early socialization experiences of family members or business decisions that have been tacitly accepted but not well received by certain family members. These insights help identify the catalyst for conflict, often shaped by a complex interplay of power dynamics, personal interests, and parental authority. These factors can range from seemingly simple strategic decisions to more complicated processes such as leadership transitions or actual family disputes.
This evolution is often triggered by significant events such as children reaching adulthood or the complexity of the succession process.
Conflict is not static. It evolves over time through processes that can lead to escalation, spillover effects, or eventual resolution. This evolution is often triggered by significant events such as children reaching adulthood or the complexity of the succession process. Conflict may also shift from one situation to another, for example, a conflict that initially arises at home may be brought into the business due to the communication dynamics among family members. Conversely, conflicts that arise in the boardroom may reverberate at home or in other workplace settings. The family and business interconnectedness adds complexity to conflict and its management.
Mapping the who, what, where, why, when, and how of conflict is essential for both those directly involved and those mediating the conflict. As such, this framework can help advisors and family business members define conflict in a systematic and pragmatic way, which is critical to building common ground and facilitating constructive dialogue aimed at finding potential solutions.
Analyzing the types of conflict (the what) using this approach is valuable for practitioners and family business members as it helps them distinguish between the different objects of conflict and assess whether they are beneficial or detrimental. While conflict is often perceived negatively, certain types can have positive effects. For example, process conflict can promote the evaluation of different options, and task conflict can improve the quality of decisions. These types of conflict should not be avoided altogether, but rather managed effectively. In contrast, more harmful forms of conflict, such as relationship conflict, should be carefully managed.
Identifying the motives (the why) and the scope of conflict in terms of the actors (the who) and loci (the where) is critical to determining areas of intervention and appropriate conflict management strategies. For example, conflicts that originate within the family and involve family members with and without a role in the business may eventually spill over into conflicts at the firm level, affecting the board or organizational dynamics. Such conflicts cannot be effectively addressed by focusing solely on the firm; they require interventions that draw on different expertise, such as a coach or family mediator, and may need to include other family members involved in the dispute.
This practical tool can help you to systematically analyze conflict and, by mapping the various dimensions of conflict, create targeted interventions and informed decision-making to prevent conflict escalation and promote effective conflict management.
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