WHO IS TO BLAME?
When I studied Torts in law school, our class spent weeks on the concept of causation, learning how the law looks at cause to determine fault and liability. So, what does this have to do with family business? I’ve been thinking about causation lately, after reading Blair Trippe and Doug Baumoel’s excellent book, Deconstructing Conflict. Deconstructing Conflict reminds us that the causes of conflict in a family business may not be as obvious as we first assume, and that it is worth delving deep to understand conflict and possible measures to resolve or ease it. It reminds us that there are layers of causation, and that what sparks conflict may not have much to do with the actual cause.
FAMILY BUSINESS SYSTEMS CRAVE EQUILIBRIUM
Everyone in the system—owners, managers, family members—wants to be able to go about their lives and do their jobs in (relative) peace and stability, and the system establishes a working order—a baseline. Individuals so crave equilibrium that they are willing to ignore or downplay an issue, just to keep the system running, and the issue thus recedes as the system accommodates it. For example, senior family managers pay all the young family members who come to work in the business the same amount, to avoid having to evaluate their nieces’ and nephews’ relative ability and performance. An aging family manager retains the title of CEO long after his mental abilities have diminished, to avoid angering him. Director seats are automatically granted to branch family members, regardless of their knowledge or skills, to keep things “even.” These are the sort of accommodations that business-owning families commonly make to sustain equilibrium—to “keep the peace.”
THE TROUBLE IS, OVER TIME, THOSE ACCOMMODATIONS ADD UP
If the root causes—lack of a family employment policy and system to evaluate performance and compensation, lack of will to address disability, lack of an effective board nomination and development system—aren’t addressed satisfactorily, the accommodations will begin to overwhelm the system. Often, those on the fringes of the system—newcomers such as spouses, or family members who don’t work in the business—can see these issues clearly, and feel freer to speak openly about them than those in the midst of the system, such as family business leaders.
WHAT HAPPENS WHEN THOSE ON THE FRINGES SPEAK OPENLY ABOUT A PROBLEM, WHEN THOSE IN THE MIDST CAN’T OR WON’T?
Ideally, a useful discussion will follow: the issue can be identified, the causes better understood, and an effective solution agreed upon. Often, however, particularly if the accommodation has been in place for many years, the speaker is disregarded, and possibly even chastised. The speaker might be labeled a “black sheep” or “troublemaker.” This is a symptom of the system doing its best to go back to its old equilibrium, even at the cost of silencing one of its members. The system tends to blame the spark—the speaker—for the issue, rather than dealing with the cause.
Sometimes, it is impossible for the system to reset the accommodation and return to equilibrium, and the conflict explodes. Such situations can be fraught, disturbing, and deeply uncomfortable for everyone in the system. However, explosive conflict does offer the hope of progress. In the midst of the turmoil, if the group can identify and acknowledge the problem, commit to taking action, and address the issue that until then has been accommodated, then the family and the business can emerge stronger.
Conflict in family business systems can be mitigated or managed by acknowledging issues and problems rather than accommodating them. Committing to good governance—developing and implementing a tailored family employment policy, or building a board of directors that brings experience and expertise—enables business-owning families to make conscious and explicit choices that defuse conflict, even as they strengthen the family-business system.