Resolving Conflicts in Family Business

How can one resolve conflicts within a family business when emotions could be counterproductive to the company operation?

When differences arise among family members in a company, emotions may run high and could become counterproductive to the business operation. Peggy Chan, Director of Program, ISS Family Institute at the International Social Service Hong Kong Branch, shares with China Business Knowledge @ CUHK about how one can resolve conflicts within a family business.

By Louisa Wah Hansen

Why is it important for a family business to understand the emotional dynamics among the family members?

Peggy Chan: Emotional process can enhance or destroy a family business. Let’s say your brother has a problem and prefer to lock himself in his room to think about the solution. If you are anxious and keep on pestering him, it would turn into a conflict situation. Therefore, it is important to have a better understanding of family dynamics, so that family members can manage themselves better and attain their business goals at the same time.

You mentioned “family members can manage themselves better”. Why is it not about managing others, as in the traditional sense of management science?

Peggy Chan: When it comes to family relationships, it’s not a question of managing others, because to change others is the most difficult thing in the world.

What kind of symptoms do you see when conflicts arise in a family business?

Peggy Chan: When there are intense differences among family members, they may cut off their communication and start distancing or withdrawing from one other. They may sidestep the issue and resort to gossiping or backstabbing. They may blame or make somebody a scapegoat. They may accuse, criticize or attack one another. All of these are signs of heightened tension that need to be dealt with as soon as possible.

Why is it important to identify these symptoms at the earliest stage?

Peggy Chan: The sooner we can detect them, the easier it is to reduce the level of anxiety of all parties involved. Then we can avoid the loss of productivity and the more extreme scenario of litigation.

What are some of the typical Chinese ways of dealing with family conflicts?

Peggy Chan: Chinese families place a great emphasis on blood ties. Preserving the integrity of the family structure is of paramount importance. So they tend to prefer resolving conflicts within the family as much as possible as opposed to going to court. It is not uncommon that family members are expected to sacrifice themselves for the sake of the family business. Giving up one’s own will and accommodating to and obeying others – especially the patriarch of the family are typical Chinese ways of resolving conflicts within the boundary of the family.

Does it mean that Chinese families are less confrontational than their Western counterparts?

Peggy Chan: We have people who are very confrontational in both cultures, so the same phenomenon exists across cultures. But in the Chinese context, the traditional virtues of obedience and paying respect to the elderly are still very much valued. So there is a greater readiness to acquiesce and sacrifice one’s own needs for the common goal of the family and its business.

What do you suggest family members do when symptoms of stress or anxiety show up?

Peggy Chan: First, they can start gathering facts like what, when, where and how. This will help them identify the reality of the situation. Our feelings are often tainted by subjectivity, which may not always be accurate. So it helps to look at the facts. Once the facts are laid on the table, they can look at the situation with more objectivity and approach it with rational thinking. Third, they can try to make decisions based on principles or values cherished by the company. Lastly, they should identify their functional roles.

What do you mean by functional roles?

Peggy Chan: These are emotional roles people play which can be a rescuer, mediator, emotional caregiver, over-achiever, under-achiever, Mr./Ms. Almighty, saint, devil, etc. In a business setting, a person who occupies the same role in a rigid manner may be beset with tension and pressure. For example, if you have been a star all your life, people would expect you to solve all the problems. Then you would feel a lot of pressure and you can’t share your problems with others because you would be perceived as weak. It’s actually OK to play different roles from time to time to release the tension.

Are there any other tactics you would suggest to resolve conflicts within a family business?

Peggy Chan: You need to know the family’s and the company’s history and where the trigger points are. You might want to steer away from the difficult subjects. Then you need to identify who the “step-up” people are. These are the people who amplify anxiety. If you share a problem with them, they would get more nervous and things could get out of hand. Instead, recruit those “step-down” people who can help calm down the situation and help you see things from a different angle. Lastly, look for certain values in the family, such as fairness or kindness. These values can have a powerful impact on how the business is run.