Putting Success Back Into Succession – A Values Approach to Conflict Resolution

Family businesses face a number of complex issues. This short article explores how values can address and perhaps resolve some of these issues. We propose that mutual appreciation of individual values amongst family members can help resolve conflict issues. This process involves measuring and comparing groups of values (referred to as orientations) between individual family members.

An increasing number of family business advisors and practitioners now use tools to measure their clients’ values. In this particular article we discuss a tool which we have developed which we think will aid practitioners in this exercise.

The problems specific to family businesses

Unlike non-family firms, family businesses have the added complexity of the family relationship attached to business decisions. This extra level of complexity brings with it problems for those family members who perhaps already have pre-existing family relationship problems. Often disputes which occur within the family at home can be transferred to the work environment and vice-versa.

What is conflict?

We use Jehn and Mannix (2001) to define three types of conflict: relationship, task and process. The first, relationship conflict, explains how individuals within a group have effective rather than cognitive conflict with each other. Put simply this type of conflict illustrates how individuals dislike one another through personal feelings of tension, friction or irritation. In family firms this personal dislike can often lead to disputes and conflicts within the family and ultimately lead to succession problems. The second, task conflict, concerns what the task is that needs to be completed. In short the issue is about “what should be done.” The third, process conflict, is about how the task in hand will be achieved and who will do it. Family members may believe that they are more competent than others in carrying out a task and may feel reluctant to let others attempt the task. They may feel that others within the family may not approach or complete the task in the way they would wish. In short they may have a “if you want something doing, do it yourself” mentality. Thus process conflict is about how the task should be carried out and who should perform it.

By their very nature task and process conflict are present in all family firms, however these types of conflict are what we call ‘healthy conflict.’ By this we mean that these types of conflict are necessary in any business (not just family) to create an environment where different approaches and ideas will flourish. It is relationship conflict which, if present, can cause the business to fail. It is evident that all three types of conflict coincide when the successor is being identified and the succession process is underway.

What are values?

When thinking about values we draw upon the work of Rokeach (1973) and Weber (1990) to identify four groupings of values. These four groups are named: Personal, Social, Competence and Moral:

Personal: Pleasure, Self-respect, Freedom, and Social recognition

Social: National security, Equality, A world of beauty and a world of peace.

Competence: Logical, Independent, Responsible and Intellectual

Moral: Helpful, Honest, Loving and Forgiving

How can a consideration of values help with conflict?

The following case illustrates some of the issues:

Mark is a second-generation owner of a family business which provides plumbing and central heating services in London, England. The business currently employs 500 members of staff working across the greater London area.His Son, Scott, has been away to University to study for a degree in business, during which time he took part in an internship programme with a large construction company in Dubai. Despite initial reservations, Scott has agreed (with persuasion from his father) to spend some years working in the family business. His is keen to implement innovations into the business which he has learned throughout his time at university and his internship. Following a number of hot summers in England, Scott thinks that it would be a good idea for the business to diversify its product range and offer two new services. The first is air conditioning and the second is solar roof paneling. Knowing that his father will be difficult to convince, Scott has drawn up a business plan to convince Mark that this diversification will increase profitability and ensure that the business is sustainable for future generations of the family. He discusses the plan with his uncle, James, who has his own separate business and is in fact a supplier to his bother’s business. James and his brother Mark have had problems in the past which has left their relationship slightly tarnished. Scott approaches his dad and proposes the new ideas. He is met with hostility particularly when he mentions that he has already discussed the plans with his uncle James. His father would prefer to focus on delivering a consistently strong quality core product, while making a conservative income. He does not want to diversify the business into ‘risky’ areas. In particular Mark feels that the air conditioning is about profit more than what the customer actually needs and has negative environmental consequences.

The case study outlined above is typical of family businesses where multiple family members disagree about a specific issue. There is clear evidence in this case that there have been problems in the past with Mark and his brother James, which are now beginning to involve Mark’s son, Scott. In this particular case the family decided to request the services of a family business advisor/consultant to help solve the issue. The consultant decided to carry out a values exercise with the family to help appreciate their point of view. The results were as follows:

Unsurprisingly the results show that Mark (the father) differs in his values in comparison to James and Scott (the son), who seem to be quite similar. The importance of the exercise is in the discussion which occurred afterwards. When the family business advisor sat down with the three individuals and showed them the results they were able to better understand each others’ viewpoints and why they were making particular decisions. Scott realised that his father is more likely to make decisions based on what he believes to be morally right or what is better for society. Mark came to the realization that his son is more likely to think about the businesses core competencies and how to progress in a rational way.

The exercise resulted in Mark agreeing to the solar panel project because it would enable the business to move into an area which would help with the environment and make the business more sustainable. Scott compromised on the air conditioning and followed his father’s request to carry out some work in the local community free of charge for half a day a week.

We observe that because the exercise took place each individual was able to have a better appreciation as to why the other was making decisions in a particular way. The exercise enabled them to come to a rational compromise which reduced the amount of relationship conflict within the business. In turn this can allow for a more successful relationship going forward for succession.

What are the implications for family businesses?

Family firms must recgonise that the individual family members, who make up the business, all have their own value patterns. Thus they are likely to make decisions in different ways. While this may seem an obvious statement, families fail to recognize that the business is not just about the business values or the business vision, but also about those individuals who make up the core family business and by implication that vision. Being able to better understand each individuals’ values may help in understanding their individual perspective and how/why they make decisions in a particular way. All this aids the family when a decision needs to be made because each of the ‘players’ understands why the other may be approaching a decision in a particular way. When it comes to succession families can also use this understanding to identify where they have common ground in order to build better, more stable relationships going forward.