Tips for addressing and managing differences

While conflict is a normal and healthy aspect of human behaviour, prolonged conflict can, and does, have both human and financial costs.  It is, therefore, an area of concern for entrepreneurs and business owners whose vision is to see their operation thrive beyond their reign.

In this second article on the topic of unresolved conflict, we explore five tips for addressing and managing differences in the three key areas of the family business to help you transition your business without loss to wealth or personal relationships.

1. Be Aware of your Fears

While the assumption is that people generally do want to resolve unhealthy situations, in reality we sometimes ignore a conflict because there is a greater underlying fear.  It may be a fear of rejection or criticism from a family member, or a more tangible fear like a loss of wealth or equity that is controlling our actions and reactions.  It is the perception that something greater than the conflict itself threatens our well-being.

Identifying these fears can be helpful in determining a course of action to address not only the presenting problem (the conflict) but also the underlying issue that is preventing us from taking action.  Just like with a medical doctor, treating the symptom is a short-term fix.  The preferred solution is to identify and address the root of the problem.

2. Create Positive Conflict

In embracing the belief that change is merely an opportunity for even greater success, the goal is to be proactive in managing the conflict that results from change.  With an awareness that some conflict is inevitable, we can focus on creating what we call Positive Conflict.

So what exactly is Positive Conflict?  It is the creation of a “we-focus” or a common interest in getting to the same place.  It is trusting that we can engage in discussions that are based on clear, unfiltered facts instead of guarded comments.  It is the conviction that, even though people have varied experiences and differing opinions, decisions will be made based on what is relevant to that common interest.  It is the ability to let go of any baggage arising from past history and relationships, recognizing that trying to change what has already happened is futile and often digs the hole deeper.

As shown in The Positive Outcome Model below, the key is to recognize and accept the things that have until now kept you mired in the past (the left side or “yesterday”) but then turn the focus to “tomorrow” and where you want to be in the future (the right side).

The right side of the model shows us that getting to a positive outcome or common interest requires open communication and a safe environment where:

• this sharing of facts can occur
• people can express disagreement without hostility
• there is a commitment to finding an effective resolution

3. Develop Prevention Strategies

As the old adage purports, prevention is better than cure. While it is not possible to plan for every situation, there are many things you can do to prevent conflict from gaining a foothold in the first place, or from escalating to dangerous levels. Consider the following proven tactics:

• Create policies for as many areas as possible so there is clarity around what is required and acceptable.  For example, criteria for management or ownership in the business, clear expectations around roles and responsibilities, and a fair and equitable estate plan go a long way towards managing potential conflict.

• Set out communication and decision-making procedures to keep the focus on the common interest.  Providing family or team members with greater awareness around what constitutes effective communication, and a process for getting consensus, have proven extremely beneficial for numerous business families. 

• Build structures that provide a safe, non-emotional environment for ongoing education and regular discussions so that the differing objectives of each circle within the family business can be met. Forums such as Family Councils and Advisory Boards are critical for keeping people connected and managing conflict, while at the same time promoting the overall professionalism of the business.

• Develop mentoring plans that include goals and timeframes for prospective managers and successors to ensure continuity and strong leadership in all generations.  

• Understanding everyone’s natural conflict handling style will help you recognize and manage interactions that have the potential to go underground or explode.  An awareness of the five ways people instinctively react to conflict is also a key strategy in moving people from the left to the right side of the Positive Outcome Model.  

4. Issues Resolution Process

Theoretically, conflict arises as we try to satisfy some psychological and often unconscious need.  Dr. Kenneth W. Thomas explains conflict as “the process which begins when we perceive that someone has negatively affected, or is about to negatively affect, something we care about.” 

The more deeply we care about something the more intense the conflict.  When faced with a situation that goes against our inherent principles, we instinctively adopt a position that frequently clashes with the position taken by another party.

In their book “Getting to Yes” Roger Fisher and William Ury explain that by concentrating on these positions, we tend to underscore our disagreements.  However, if we instead focus on identifying or clarifying the underlying needs, we often find we have more in common with the warring party than was first believed, and are then much more likely to find a win-win solution.  So separating the person from the problem and understanding the needs of the other person are the first steps in any effective and collaborative issue resolution process.  The next step is to brainstorm possible solutions that address the needs of both parties yet reconcile the differences to provide a win-win strategy.  Finally, comparing and testing the proposed solutions using criteria that do not force either party to yield to pressure ensures we adopt the option that delivers the highest mutual gain.

5. Third Party Assistance

Recruiting a third party to assist with the issue resolution process is certainly recommended. A qualified facilitator can:

• Provide guidance in preventing or addressing conflict to manage change 
• Work with you to develop communication structures
• Ensure all parties feel empowered to speak their mind, are listened to, and believe they have been an integral part of the solution.  

Taking steps to not only create positive conflict but also develop appropriate prevention strategies and an issue resolution process will ultimately enhance your ability to implement a successful business transition.  For assistance in this area, or with any of the other six complexities facing business families, contact your BDO advisor or our Business Transition Services team at 1.800.598.6400.