Succession planning in a family business is tricky. It can be strategically complex (as many succession plans are), but it can also be emotionally charged. You’re not just talking about roles and ownership; in a family business you’re also navigating legacy, identity, and relationships. This is why a conflict resolution plan is so important.

Before you can build your conflict resolution plan, you first need to identify common sources of conflict. Only when you know what you’re up against can you counter it.

Identify the source of the conflict

Here are some common sources of conflict that could occur during your family’s succession planning meeting.

Existing Family Tensions

Past rivalries, distrust, and other family tensions can be one of the most common sources of conflict when family members work together. These tensions often come to light during succession planning meetings. These family tensions could:

• Sow doubt in current leadership
• Lead to hurt feelings
• Erode trust in board members or family council
• Derail meetings
• Make it harder to reach a consensus

Founder’s Involvement

How involved the original founder is with the business can cause conflict. A founder overly involved in the business may struggle to let go, which can make their successors feel undermined or controlled. Conversely, a founder who disengages from the business too early or abruptly can cause the next leaders to feel abandoned, and they may feel unprepared to take over.

Governance Structure

Governance is the framework of rules and processes that help businesses succeed. Because family businesses tend to rely on personal relationships, trust, and tradition to make decisions, governance structures are often informal or unclear. But without well-defined structures over things like employment policies, in-office expectations, and voting rights, families may inadvertently create the perfect setting for conflict to thrive.

Demographic Differences

When you head into a succession planning meeting, consider how demographic differences could play a part in the planning process and be prepared to discuss these differences openly. Here are a few to consider:

• Generational: People of different ages may have different styles of communication, expectations for workplace boundaries, and tech fluency.
• Ethnic: People with different cultural backgrounds may have different views on hierarchy, gender roles, and how to best express disagreements.
• Ideological: People with different ideological stances could have different preferences for frameworks like charitable giving strategies, ESG, and DEI.
• Education: People who are differently educated could clash on how best to operate day-to-day (like use of technology or the ideal flex schedule) and could clash on big-picture decisions (like best ways to innovate or expand the business).
• Wealth: People who grew up with different levels of wealth, or people who had access to different level of income, may approach financial decisions differently. They may also have different views on risk and long-term goals for the business.

Establish strategies for preventing and resolving conflicts

To help ensure future succession planning meetings are fruitful, there are a few things you can do:

• Get buy-in from all family members from the start: The business’s core purpose should be clearly defined, and anyone joining the company should align with that purpose. They may have different ideas for how to get there, but having a shared commitment to the “why” makes navigating disagreements much easier.
• Establish clear communication channels: Make it safe and easy for family members to express concerns, especially during meetings. You may, for example, find it helpful to adopt meeting rules that allow each person to speak uninterrupted before others chime in with questions or concerns. Simple expectations like this show family members that they and their ideas are valued.
• Rely on data and facts: Emotions often run high in family businesses. While emotions are important, they should be tempered when making high-pressure decisions. This is where data should come in. Use data-driven insights to guide your decisions so that your solutions are as objective as possible.
• Have a conflict resolution plan in place: When there is a disagreement within the business, look to this protocol. Clear, agreed-upon processes in your conflict resolution plan will keep discussions productive and ensure no one feels singled out or dismissed.
• Build out other governance protocols: Conflict resolution plans aren’t the only governance protocols to implement. Some governance policies you can formalize are employment criteria, family council roles and rights, dividend policies, codes of conduct, compensation policies, and performance evaluation standards. Doing this will ensure your business runs smoothly even through leadership changes.

Avoid future conflict.

Now that you’ve built and formalized your conflict resolution plan, it’s time to put it into action. When tensions arise, as they inevitably do in family businesses, use this plan as your guide. If you use this plan consistently, even with small disagreements, it will become a tool for preserving trust and promoting fairness so that your succession plan discussions stay focused and productive.

If you want help building your succession plan, or if you want help establishing other governance protocols, reach out to your Meaden & Moore advisor. We work closely with family businesses to help them through difficult transitions and would love to talk with you about yours.