Family businesses are among the most dynamic subsectors of any country's MSMEs, often celebrated for their resilience and ability to maintain traditions across generations. Many have grown into impressive global market players, with some even achieving iconic status and celebrating centennial milestones. However, the path to success in family businesses is often fraught with challenges. The family, often the first "school" where young entrepreneurs learn the basics of business, can indeed serve as a fertile ground for nurturing entrepreneurial mindsets.
Yet, beneath this seemingly ideal narrative lie unresolved conflicts that linger among family members. If left unaddressed, these issues can lead to the implosion of both the business and the family. This may be a simplified description of the role of Organization Development and the OD professionals in family businesses, but it underscores the importance of navigating these complexities. How can family businesses effectively manage these conflicts, gain a deeper understanding of their dynamics, and implement interventions that lead to lasting solutions?
Unresolved Family Conflicts
Family businesses are unique in that they intertwine personal relationships with professional responsibilities. While this can create a strong sense of unity and loyalty, it can also lead to deeply rooted conflicts. The unresolved and often unspoken tensions from the past that accumulates are like time bombs waiting to explode. These conflicts may stem from various sources:
1. Inheritance and Succession Disputes. Disagreements over who should inherit or lead the business can cause rifts that last for generations. When these issues are not addressed openly, they can foster resentment and distrust, simmering beneath the surface for years.
2. Generational Differences. As leadership passes from one generation to the next, differing values, priorities, and visions for the business can create friction. Older generations may resist change, while younger members may feel stifled or undervalued.
3. Personal Grievances and Rivalries. Family businesses often see conflicts that are personal rather than professional. Sibling rivalries, parental favoritism, and past grievances can manifest in business decisions, leading to unhealthy dynamics.
4. Lack of Clear Communication. Families often assume that close relationships negate the need for formal communication. However, this lack of structure can lead to misunderstandings, unmet expectations, and festering conflicts.
How Unresolved Conflicts Erode Family Businesses
When these conflicts are not addressed, they can slowly erode the foundation of the family business. The implosion may not be immediate, but its effects are often felt across multiple areas:
1. Erosion of Trust. Trust is the cornerstone of any successful business, but unresolved conflicts can slowly chip away at it. As trust diminishes, so does the effectiveness of leadership and collaboration, leading to poor decision-making and reduced business performance.
2. Stunted Growth. Family businesses plagued by internal conflict often struggle to grow. The focus on internal issues detracts from innovation, strategic planning, and market competitiveness.
3. High Employee Turnover. Non-family employees can sense tension and may choose to leave a toxic environment. This can result in high turnover rates, loss of talent, and increased recruitment and training costs.
4. Damaged Family Relationships. Perhaps the most tragic consequence of unresolved conflict is the permanent damage it can cause to family relationships. This not only impacts the business but can lead to estrangement and deep emotional wounds within the family.
Seeking OD Practitioners’ Help
The good news is that family-based organizations do not have to navigate these challenges alone. There are internal and external OD practitioners who can provide invaluable assistance in addressing and defusing these internal "time bombs." Plus there are also emerging institutional help. Ateneo’s Family Business Development Center is a good example.
1. Facilitating Open Communication. OD practitioners can create a safe space for family members to voice their concerns and grievances. Through structured communication processes, they can help the family develop a culture of openness and transparency.
2. Mediating Conflicts. Trained in conflict resolution, OD practitioners can mediate disputes, helping family members understand each other’s perspectives and find common ground. They can guide families through the process of healing old wounds and moving forward together.
3. Developing Succession Plans. Succession planning is a critical area where OD practitioners can provide support. They can help design a clear and fair succession plan that takes into account the needs and aspirations of all family members, ensuring a smooth transition of leadership.
4. Building Governance Structures. OD practitioners can assist in establishing formal governance structures that define roles, responsibilities, and decision-making processes. This helps prevent future conflicts by creating a clear framework for how the business should be run.
5. Fostering a Positive Culture. By working with the family to align business practices with family values, OD practitioners can help build a positive and cohesive company culture that supports both the business and the family’s well-being.
Possible OD Interventions
For family businesses grappling with internal conflicts, seeking help from an OD practitioner is not just advisable—it may be the key to ensuring the longevity and success of both the family and the enterprise. By addressing the root causes of conflict and building a strong, cohesive foundation, family businesses can move forward with confidence, preserving their legacy for generations to come. At their disposal, both the internal and external OD practitioners have customizable diagnostic and dialogic intervention tools they can use. Some examples are models and procedures related to succession planning, governance, advisory family boards, Theory U conversations. For dialogic data gathering and feedback tools, OD practitioners can try: Open Space, The Elephant in the Room, Recalling the Family Stories, A Family Museum, The Black Sheep or the Inter-Gen Power Cups.
Challenges of Managing
Family business advisor Enrique Soriano III of the Ateneo sits down with Rappler to talk about managing family businesses and how to keep the drama away from the boardroom https://www.rappler.com/business/2400...
NOTES
ODPN Courses
Designing Effective OD Interventions with Dr Melissa Reyes, PhD on September 12; and Process Observation and Analysis with Dr Josephine Perez, PhD, RPsy on November 28 in the Meralco Power Tech. Join us!!!
Ed Canela’s Seminars
AI for HROD Professionals SAIDI Webinar on October 3, 4 and 7. Course will equip the participants with the right AI tools for key HROD tasks.
14th Advanced Leadership and Management (ALMa) Course for the University of Philippines Institute for Small Scale Industries (UP ISSI). Will present Module 2: Decision Making and Analysis Improvement: Business Analytics on September 14.