Conflict is part of the human condition. Therefore, it is neither negative nor positive, but rather a natural phenomena (Espinoza, 2011). The negative connotations traditionally attributed to conflict are at odds with current theories that explain the use of the term as an engine of change and generator of competitive advantage. Such consequences can only be achieved through effective management of conflict processes, however, the first step towards this is to understand its nature and realise that this is a process constructed by the parties involved and based on their beliefs, paradigms and experience. In short, conflict is not generated by “what happens”, but by what human beings “attribute to what happens”(Fried and Schnitman, 2000). In this sense, conflict can be understood as a clash that occurs between two interdependent parties as a result of their differing or opposing views on a single problem or situation (Martin, 2011). Analysing this definition, we can thus treat it as a clash between two distinct positions towards the same goal, among individuals or entities that mutually depend upon one another.

Research indicates that conflict in family businesses usually occurs due to one of the below causes:-

• Family succession or generational change. This is the conflict par excellence and refers to the process by which the founder passes the baton to the younger generation at the end of his/her cycle within the company. In this sense the European Commission warned that the lack of preparation to ensure the succession may result in the disappearance of a high percentage of companies and related jobs. In addition, pressure is felt by family members of the previous generation when they observe that the coming generation is developing more and more, demands more space and wants to participate more in decision-making (Belausteguigoita, 2004)

• Change in shareholders. This occurs when one member of the family wants to leave the business and decides to sell their shares. Such cases cause very complicated situations within the company and the family itself.

• Inappropriate behaviour within the company. Usually generated when a family member behaves in their business role in the same way as within the family (Corona, 2005), in as much as they transfer the role they play in the family to their job and do not understand the difference between the two institutions; therefore those in the family who are more authoritarian carry this image with them into the company, as they do if their attitude is more submissive. Family members working in the organisation will display similar behaviour, but as the company and the family have different objectives, the behaviour of each family member in the company should be different (Nemesio 2000; Belausteguigoita, 2004).Not knowing how to separate the workplace and the family gives rise to arguments and talking about work and personal issues in inappropriate places (Gonzalez, 2005). The organisational climate then end ups being not conducive to development. This encourages the emergence of more intense and frequent conflicts, which is very detrimental to the family business.

• Inadequate organisational structures. In the vast majority of cases, family businesses do not have good organisational structures, which end up affecting badly company efficiency (Martin, 2009).

• Excess of family members in the company. The inclusion of family members should follow the logic of the business strategy. It is a common occurrence that the founder begins incorporating family members without knowing where to locate them or without the intention of developing the company, simply because of family obligations; this causes such saturation that if in addition these family members do not contribute anything of value to the company, the end result can be that of complete failure.

• Remuneration of family members. Different remuneration just because you are part of the family is something all family businesses tend to do; this is not only unfair but may discourage more effective workers and their commitment to the organisation (Martin, 2009).

Thee above are the principle conflicts affecting the family business. Most of the time, through not
knowing how to resolve them correctly or not having foreseen them, they could lead to the total failure of
the company. In addition to the causes associated with the incorrect separation of both systems, family and business, there are other causes of possible conflict which are classified into distinct types:

• The first typology of conflict is associated with the handling of emotions and the prevalence of informality in relationships. The management of emotional relationships leads to company affairs not being managed with logic and reason. Moreover, deterioration of the affective-emotional family
  relationships leads to inflexibility in the management of the company and intransigence and
  irrationality in decision-making (Gersick et al., 1997). To avoid this, the informality of the family
  group should not be transferred to the professional organisation of a company and this is achieved by the definition of a well- established family protocol/constitution. It is clear that family businesses require “family protocols/constitution.” as a measure to prevent potential conflict.

• The second typology of conflict is related to communication. The fact that many family members spend a long time together does not imply that there is good communication between them. Good communication within the company depends on several factors (Churchill and Lewis, 1983), among which are, in first place, one called “active listening”, in that to establish good communication one must first be a good listener. Secondly, the appropriate means of communication must be chosen. In family businesses, verbal communication is over used; although effective, this form of communication is sometimes vague. Written communication can clarify points and is durable; it also achieves compromise between family members. It is important to know when to use written communication and when to use other forms of communication. Finally, in third place, is the need to establish an open, honest communication with sensitivity. That is to say, one should always speak with clarity and honesty, but weighing words carefully, which is particularly important when it comes to family matters.

It is true that conflict can be managed. To do so, requires great tact through various conflict resolution processes which do not erode the harmony of proactive family relations (Nemesio, 2000; Martin, 2009). The different conflict management processes are negotiation, mediation and arbitration. The first is the most desirable in that it gives a better understanding of the problem, negotiation being the management strategy of conflict management par excellence. However, in order to use it, it is necessary to separate people from problems, focus on interests not positions and find a mutually beneficial solution. All the previous proposals are basic tools of “internal negotiation” which generate a high level of reassurance for families and huge benefits to businesses (Martin, 2009). With regard to mediation, it should only be implemented if negotiation does not work, because even though entered into on a voluntary basis, it requires third party intervention to resolve the conflict. This person has authority but no power to impose the solution, since mediation does not result in a solution imposed by the mediator, but in an agreement negotiated by the parties at their discretion and with the help of the mediator (Acland, 1990; Astrachan and Jaskiewicz, 2008). Lastly, arbitration is the final method, used in the event that the above two do not produce a positive outcome.

However, prevention is better than cure. So much better than managing conflict is working on preventing it altogether. A study by Ortín García, Martín Castejón and Pérez Pérez (2014) indicates that :-

• Lack of formalisation of the management and decision-making structures in order to channel informal relations towards the interests of the business and the family, provides fertile ground for conflict in the family business

• Conflicts of personal/professional interests among members of the family and the business and beyond other types of individual expectations, is yet another fertile ground for conflict.

• Processes of delegation of responsibilities based more on family closeness than on criteria of professional qualification of family members, is another case of fertile ground for conflict

• The fact that the family business has a Board of Directors and/or Family Protocol/Constitution has a positive influence when avoiding or preventing conflict in the family business.

• Family businesses with Board of Directors, Family Councils and Family Protocols/Constitutions manage conflicts better than those without these three organs of management, because they know how better to separate family issues from business issues and create a better climate in the business and in the family.

It is for this reason that at EMCS Academy we have setup the the accredited course at MQF Level 5 – Award in Leading a Family Business. This unique course deals with all the elements needed not only to run family business professionally but also how to prevent conflicts. Having said so this course will cover various elements of conflict management within family businesses. Click HERE to read about this Award in Leading a Family Business Course and to REGISTER. We will also help you gain funding for this course.