How can you avoid conflict?

First, why does it happen?

  • Emotional reasons are the main causes
  • Shareholders cannot just sell and go if disagree = internal conflict/trouble
  • Minority effectively excluded from management of the business
  • In fact management get a “free” hand which can make you complacent
  • Conflict of interest between the active and passive shareholder
  • Fear – of getting old; of retirement; of nothing to do; of change to lifelong habits; of loss of status in the community; wont let go
  • Fear of taking risks; uncertainty
  • Feeling of slight, hate; dislike of other
  • My “right”
  • Trying to prove self; I am better than him/her
  • Family differences
  • Dividend vs investment
  • No family agreement upon the direction the company should be following
  • Member without a real job to doLack of clarity about respective roles/positions after a take-over (“merger”)Sibling rivalryAge gap; retirement; freedom
  • Minority vs majority
  • A member has to be pushed out
  • Misunderstanding/inadequate communication.

How can you prevent it?

Importance of prevention

Much valuable time is wasted through internecine warfare and that alone is good enough reason to seek to avoid conflict by what ever means possible

  • Good, regular, and apposite communication
  • Understanding their needs and wants
  • Achieving family agreement
  • Help and advice from an Independent Directo.

What are shareholders looking for?

  • what is their desired lifestyle?
  • dividends for fun things/of necessity to live?
  • belonging?
  • something to hand down?
  • appreciation and then sale?
  • estate duty?
  • control?
  • supplement salary?
  • what’s best for the company? re-investment?

How do you communicate with the family?

  • AGM – brief or detailed
  • newsletter
  • regular visits to the factory
  • chance to come in, individually, for a chat
  • meeting socially
  • retreats.

Do you induct new family members, including non shareholders?

  • make an effort
  • tell them what’s going on early
  • strategy/plans
  • carry them with you
  • factory visits
  • literature.

What do they expect from you?

  • information
  • performance
  • do their thinking.

Attitude may vary if they bought shares as opposed to merely having received them. The shareholders are often also locked in, with very little power.

Consider

  • Turning attack into benefit rather than letting it get you down
  • “Induction” for new shareholders (Think of what the major pension funds get)
  • Involving them in long term strategy
  • Being available; ready to explain
  • Appointing an Independent Director to help provide stability (but not from the family!)
  • Using other “friendly” shareholders to keep the peace
  • Clear areas of responsibility and accountability for the family, just like any other employee
  • Keep significant stakes within the hands of the working family.

Remember

  • They are employees not your children
  • They are colleagues, not your younger brothers
  • Look to capitalise on familiarity but leave the parent/child relationship at home
  • Do what’s best for the business
  • Leave conflict in the office; do not take it home, nor bring it to the office
  • De-fuse in office, as adults, not at home as parent/child
  • Only one of you can be CEO or chairman; but all of you may be directors (advantage of an ID chairman)
  • Don’t take your shareholders for granted, just because they do not say or do much, nor because they do not express overt interest in the company
  • If you bring in professionals, the existing family may have less/nothing to do … except get in the way.

If it comes to that, how do you handle conflict?

  • Between whom?
    - overt players
    - others – family/senior employees
  • What do you think it is all about?
  • Do you really understand where you are coming from?
  • What do you believe are the causes.
  • When did it start?
  • Who else is being/is involved?
  • What would be an ideal solution? what’s preventing that?
  • What is their position and why?
  • Bring in an outsider (ID if you have one)
  • Do you want to resolve the conflict?
  • What’s happening “at home” – is the conflict being taken home? In what way? can you avoid this so that it remains a “work” matter
  • Recognising the role of other family members, such as spouses
  • Run a family away day and be prepared to do it several times before it becomes rally useful
  • Keep emotion out of it
  • Review the business reasons for doing something, rather than the family ones
  • Have a clear business objective and relate everything to that.

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