Prevention is the best form of cure – from my father's wisdom

For good or for bad, conflict is part of our humanity. It is woven into the fabric of any social system, and families are not exempt. Family feuds can be a great source of hurt and exponentially more complex when generational wealth is involved. Where there is considerable wealth, there is also a high potential for infighting and acrimony as family members deploy great resources to score points, defend their pride, and establish a leading role in the family. Often, unresolved family conflicts finish in a lose-lose situation. When we total the costs of conflict, the most significant ones can only be measured in terms of wealth destruction and shattered relationships.

Before diving into sources of conflict, we should distinguish between disagreement and conflict.

Disagreement generally involves a small group of people within the family system, can be traced back to a specific situation in space and time, and can be articulated logically. Disagreements can often be resolved through clarifying conversations, negotiations, or mediation.

 "Conflict is inevitable, but combat is optional"- Max Lucado.

Conflict distinguishes from disagreement as it may involve a larger group of people and often results from a series of interconnected unresolved disputes evolving over time. It sits deeper within the family, and the fight is more about personal concerns and ego than the issues at the core of the disagreement. When the conflict gets to a stage of passive-aggressivity, where family members are agreeable on the outside but privately resentful, it can become a more destructive and Machiavellian force within the family system. Over generations, it may lead to family paralysis as the conflicting views across branches of the extended family become more entrenched. If untreated, conflicts can become cancerous. Conflicts cannot be resolved similarly to disagreements; they must be cured.

What are some of the traditional sources for family conflicts?

Much has been written about sources of family conflicts. With the risk of being repetitive, we like to share some of the most significant issues when dealing with family systems.

The patriarch or matriarch

It is a paradox that the person who desires conflict less is often the very source of it. Whether a patriarch or matriarch's style is authoritarian, controlling, or conflict-avoiding, it may all lead to problems between generations at some stage in the future.

Dissatisfaction may arise when the family matriarch or patriarch uses wealth to enforce their wishes on the next generations, sometimes even beyond their grave. The resulting conflicts can take many forms, but one recurring type is 'rebellion' by the younger members of the family when, for example, they refuse to engage with those involved in managing the family wealth or act in a passive-aggressive or uncooperative manner. The source of strife may also result in family members' decision to "go their own way" rather than being ruled from the grave.

 Lack of communication and transparency

Conflicts will arise when there is no clear or insufficient communication between the family leaders and stakeholders. A lack of transparency will incubate misunderstanding, mistrust, and distance. Family members want their voices to be heard and may become resentful when they feel left out of the loop. Families must understand that building and maintaining a family dynasty is a work in progress. More than a one-time exercise, such as establishing a family office or drafting a family protocol, is required to safeguard harmony in the family dynasty in the long term.

Sibling rivalries ‍

A classical story about human desire and envy

‍Sibling rivalries areas old (or older) as our biblical history and can be found, amongst others, in the stories of Cain and Abel and Jacob and Esau. In the case of Cain and Able, the story centers around jealousy because God favored Abel's sacrifice instead of Cain's, which ended in Abel being murdered by Cain. In the case of Jacob and his first-born twin brother Esau, the story describes Jacob's deceitfulness in receiving Esau's birthright from their father, Isaac.

These stories and others teach us that many sibling conflicts are born out of ego, human desires, jealousy, and insecurity. In our modern society,  at a family level, sibling rivalry can lead to divided leadership and competing claims on the family's assets.

Family business succession

Family conflicts frequently surface when members of the next generation (and in-laws) enter the family business, and individuals seek to carve out their space vis-à-vis other siblings. It can be incredibly upsetting for the older generation when the incoming generation wants to take the company in a new direction by revamping long-standing policies, procedures, and processes. Their change in culture, beliefs, and different risk appetites, can be an emotive issue for the "old guard" whose sense of self-identity is tied up with the business and who have devoted their lives to its success.  Another recurring issue is the problem of trust, or lack thereof, amongst family members towards those amongst them who take over the running of the family business after the patriarch or matriarch is gone. Some may cast doubt on how well those privileged few uncles or cousins run the family business or the professionals who, as a rule, those in power propose and vote through based on a simple majority of family members agreeing to it.

Investment policies

Conflicts may also arise where there are differences in opinion regarding the investment of the family wealth. Some younger family members may be keen to cash in on high-yield and high-risk investments such as start-ups and crypto. This can be alarming for earlier generations, where family wealth originally derives from a conservative strategy built on traditional retail, property,  manufacturing sectors, and government debt.

Changing values

Another cause of the family dispute is a misalignment of values with forthcoming generations. Certain members of the next generation may show uninterest in the family’s wealth when not disapprove of its origins or business objectives out of a sense of social. Such views may be an abomination to other family members, who may consider such ideas naïve.

Dividend distributions 

Families grow faster than their family business

The inability of a family company to generate sufficient dividend income to maintain the living standards of a family is a traditional source of conflict. As a result of their upbringing, family members may feel entitled to a yearly paycheck from the family business. The reality is that families grow faster than their businesses. It may be impossible for an expanding family to keep up their living standards from the profits generated by the family business. Adjusting to a leaner reality typically does not sit well with some family members. The sense of discontent can grow exponentially when they observe that those working in the family business are "much better off."

There is a reason why mentioning money as an issue for family feuds was left to the last. Not because it is less critical but to emphasize that, independent of wealth, no family dynasty will be sustainable if the members do not resolve the other mentioned sources of conflicts.

So, what are some strategies to resolve conflicts?

When dealing with family conflicts, there is no one-solution-fits-all. Earlier in this article, we described how conflicts could not be managed but must be cured. As part of the "healing process," the family must first acknowledge the existence of a conflict and recognize the necessity to work towards a solution. The next step is to go to the roots of the conflict by obtaining hard data and getting an honest appraisal of the family rivalries. In the data-gathering phase, family members must be allowed and encouraged to express their feelings. They must feel safe and believe that their voice is being heard and that they are relevant. In a group environment,  each member should be able to talk without interruption while the discussion should remain focused on the issues and not turn to personal attacks. The art is to de-escalate conflicts as soon as possible and transform the resolution into a collaborative and creative process for the family group.

The best moment to avoid or resolve family conflicts is when the founders are still alive and in control of the family business. It is within their power to "organize the family" by establishing a family council and, in cooperation with the siblings, introducing a family governance protocol. Finding a forum, away from the dining table, for ongoing conversations about the family's future and the business can be a transforming experience for the parents and siblings. It makes more sense to establish the legal structures for safeguarding the family dynasty when there is a better understanding of everybody's needs and wants.

Family feuds become exponentially more complex and entrenched at the second and subsequent generational levels. The analogy to "curing the conflict" is appropriate here. Creating a positive environment of trust, constructive interaction, respect, and valuing diversity is fundamental. Regular, clarifying, and transparent communication is critical in this process. An external expert may be brought in to create mutual comprehension and to get the positive and constructive juices flowing.

An inadequately organized business succession can damage a company's future. The focus on rivalry distracts management from a productive focus on the company's customers, the company's product, and the company's future vision. Creating clear family rules about the conditions under which family members may work in the company, sound corporate governance, professionalizing the company's management, and bringing in external board members are all antidotes to internal family business struggles.

Splitting up

Sometimes it is impossible to resolve conflicts between different branches of the family. In that case, it may be in its best interests to split up the economic interests or create a buyout situation where one branch of the family buys the family business from the other. If this process is well managed, then there is a good chance that family harmony can be preserved over time.

In conclusion

Family conflicts can be harrowing for all members involved. The consequences may be financially destructive and disastrous for family harmony. A family should be sensitive to the underlying currents in the family system and not hesitate to bring in specialists to help the family prevent great pain and financial loss.

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