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					 Family Business Tensions as
They Affect Business Viability




Sharon M. Danes, Professor
      University of Minnesota
Department of Family Social Science
   Why study tension and its
  impact on family business?
• Tolerance of conflict can foster a social climate that
   allows individuals to express and test themselves as
   well as establish
  their identities (Busby, 1977).

• Too much or destructive conflict can detract from
  providing and communicating clear goals for a
  family business (Kaye, 1991).

• Family businesses can benefit from constructive
  conflict but there is a threshold at which conflict is
  no longer beneficial (Ward, 1987).
        What literature indicates
• Family and business goals differ among family businesses
• Family businesses can be lost through destructive levels of
  tension between family and business goals



• A strong business calls for open communication about
  goals and a desire to resolve misunderstandings
          Family Businesses Conflict:
      Distinct from other conflict contexts

• Family members are often fighting about deeper
  issues than it appears on the surface
• Reasons for sustaining conflict are often stronger
  than desire to solve it

• Issues are circular or systemic, not linear with a
  cause and effect
• Conflict follows a dynamic pattern
Content of Family Business
         Conflicts
              • Justice Conflict
              • Work-Family
                Conflict
              • Role Conflict
              • Identity Conflict
              • Succession
                Conflict
                  Sample
• Nationally representative sample of family
  businesses
• Subset of businesses with data from
  business and household managers
• Primarily male business managers and
  female household managers
Initial Findings on Tensions
    & Goal Achievement
• Overall, household manager had higher
  levels of tension than business managers
• Highest level of tension by both managers
  was unfair workloads, followed by resource
  competition between family & business
• Household managers also indicated greater
  level of success in achieving most important
  goal identified
   Predicting Business Tensions
     & Achievement of Goals

• When family health (APGAR) is good,
  tensions are low for both managers




• The higher the total level of tension, the less
  success in achieving business goals
  Household Manager’s Work
       Decision Status
Table 2. Household's Manager's Work Decision Status

                    Work in the Business?
 Decision               No          Yes
Maker in No            38%         20%       58%
   the
Business? Yes           6%         37%       43%
                       44%         57%
Household Manager’s Work Decision
      Status Tension Sources

• For those who have decision-making
  responsibility in the business, they have
  higher tension levels in:

  – lack of role clarity
  – confusion over authority
  – issues over unequal ownership
   Work Decision Status
  Impacts Tension Levels
• Those who are decision makers in the
  business, but do not work in the business,
  are more likely to have higher tension levels
  than those who do not work in either arena
• Potential for “crazy-making” ?
• For this group, tensions are higher:
  – competition for resources
  – confusion over authority
And interestingly enough...
• The business manager who reports having a
  spouse (household manager) who shares in
  the decision making - reports the same
  higher levels of tension in:

  – lack of role clarity
  – confusion over authority
  Farm Family Businesses Differ
from Service and Sales Businesses

 Lack of role clarity

 Confusion over authority

 Unequal ownership

 Competition for resources between family
  and business
A Mutual Gains Negotiating
      Approach to
           Mutual Gains
           Negotiating:

an attempt to get people to
synthesize aims rather than
    enter into win-lose
      competitiveness
Mutual Gains Negotiating
      Competitive            Mutual gains
• Win as much as        • Provide a process for
  possible through        parties to reach
  negotiation/demand/     creative mutual gains
  claiming                agreements
    Mutual Gains Negotiating
         Competitive                 Mutual gains
• Win as much as possible    • Provide a process for
  through negotiation/         parties to reach creative
  demand/claiming              mutual gains agreements
• Competitive, suspicious,   • Cooperative, trusting, open
  closed                     • Win - Win
• Win – Lose
Mutual Gains Negotiating
       Competitive                  Mutual gains
Each party:                 Each party:
• Defines their positions   • Seeks to identify interests
                              of all parties
• Establishes bottom line
  demands                   • Defines their common
• Negotiates with other       goals
  parties                   • Identifies problems and
                              constraints
• changes demands,
  surrenders, threatens     • Generates a range of
                              alternatives
• Agrees or withdraws
                            • Works toward agreements
                              acceptable to all parties
• Focus on INTERESTS Not
  Positions
• Separate the People Issues from
  the Contextual Issues
• Invent Options for Mutual Gain
• Insist on Using Objective Criteria
Jones’ Vacation
   Role Play
  Jones’ Vacation--Position
        Joan                  Bill

• Two Weeks at the   • Two Weeks in the
  Beach                mountains
Jones’ Vacation-- INTERESTS
           Joan                         Bill

•   Need a rest             •   Need a break
•   Need time with Bill     •   Time with Joan
•   Swimming/Sunbathing     •   Fishing and hiking
•   Sandy beach, salt       •   Mountains - tradition
    water smell and ocean       and views
    beach dining
   Focus on INTERESTS--
         Not Positions
• Work to understand other parties
  interests -- listen and be empathetic.
• Discuss your own interests openly and
  candidly.
• Commit to meeting other parties
  interests.
• Must change the way you act!
Mutual Gains Negotiating
  Competitive           Mutual gains
• Power: The key to   • Empathy: The key
  resolution of         to mutual gains
  traditional           negotiations.
  negotiations.

				
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posted:2/23/2008
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