How to avoid conflict in family businesses

A shared history and a round of family gatherings are not the same as regular business meetings. Family members can assume they already know a relative's point of view and discussions can be more emotional than in a business where employees are not related. Or a family member might hold back from voicing an opinion because they are afraid of upsetting a close relative.

There is a greater risk that personal bugbears will seep into the workplace or that the head of the family will assume leadership when they don't have the skills.

Avoid these pitfalls by:

• holding all meetings at work, not at home;
• giving all staff the chance to provide constructive feedback;
• arranging 'away-days' to discuss future strategy and to build teamwork;
• appointing an advisor or non-executive to give a neutral viewpoint.

Motivating non-family members

Pay and promotion can spark conflict between family and non-family employees. Avoid this by having a remuneration policy that is consistent, fair and open.

Someone's pay should be based on their value and the going rate for the job. Don't link salary to perceived need or try to entice a family member to join the firm by offering a wildly inflated salary. Equally, a relative shouldn't have to prove their loyalty by suffering unreasonably low pay.

Retirement packages should be agreed well in advance and all benefits, bonuses and incentives must be worked out on set criteria. Don't invent phantom jobs or unreasonably high salaries to transfer tax-deductible wealth to your family. Non-family members doing the same job as family members should be paid the same rate and given equal chance for promotion and training.

Most successful businesses ensure that family members spend some time working for another employee. This gives the company a fresh injection of skills and ideas. A family member with a new qualification or broader experience is also less likely to attract resentment from non-family employees.

At Wildlife, a clothing company which won the Orange Best Family Business Award for 2004, each of the three brothers who took over from their father have worked for other employees. Leigh Chadwick, for example, worked at Compass Group and is currently studying for an MBA in Family Business at the University of Gloucestershire.

Wildlife does not have a managing director or chief executive office. The three brothers share leadership and each oversees different parts of the business: human resources, merchandising, e-commerce, governance and strategic planning.

'We avoid conflict by having clear roles and responsibilities which reflect our skills and competencies,' Leigh says.

Useful links

Business Link
www.businesslink.gov.uk

BDO Centre for Family Business
www.bdo.co.uk/cfb

Grant Thornton Centre for Families in Business at the University of Gloucestershire:
www.glos.ac.uk/familybusiness

Family Business Network
www.fbn-i.org

Wildlife
www.wildlifeonline.com