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Money Management Avoiding Family Business Conflicts
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There are 5.5 million family-owned businesses in the United States, according to Family Enterprise USA. These companies often unite family members behind a common purpose, but conflicts can arise when professional and personal lives overlap.

If you are involved in a family business, the California Society of CPAs ( offers this advice on how to sidestep some of the internal squabbles that can affect these companies.

 Groom Future Leaders

About one-third of family business owners say they have no plans to retire, but since their average age is 51, it seems likely that change is actually looming for many.

Succession can be one of the toughest challenges for a family business because of the mix of business and personal issues involved. That’s why it’s important to take a realistic look at the future, decide what kind of leadership will be needed and determine whether that leadership can be nurtured internally or must be hired from outside.

Your CPA, who acts as a trusted business adviser for many small companies, can help you address these issues.

 Clarify Job Responsibilities

Because of the personal ties among the employees, family businesses often have a much more informal nature than other companies. That can be an advantage, but it can also have its drawbacks. For example, to avoid confusion or hard feelings about expectations and accountabilities, it’s best to create detailed responsibilities and goals for every position in your organization and hold regular employee reviews to discuss whether employees are meeting expectations.

No matter how small your company, formal job descriptions help clarify each employee’s required contribution. They can go a long way toward preventing misunderstandings about your expectations. Use the formal job description in your employee reviews to help frame your discussions about any improvements you would like to see and challenges you believe the employee must overcome.

The existence of a formal job description helps to establish that any constructive criticism an employee receives is not personal. If job termination becomes necessary, a job description and reviews can help you focus on the objective business reasons that have made it necessary.

 Speak Up Sooner Rather Than Later

It’s often tempting to avoid business conflicts especially when they involve family members but it’s best to address them when they occur. By tackling a problem directly, you avoid letting it worsen to the point where it may be impossible to resolve.

As mentioned, regular employee reviews can help, but it’s also a good idea to talk about glitches immediately, with a focus on alternative approaches that should be followed if the situation happens again. State clearly what the problem is, explain how it affects the business or other employees, spell out what changes are needed and review the outcome if change doesn’t happen.

For example, say that a family member habitually fails to turn in all the necessary paperwork regarding certain business transactions. After stating this problem, describe how it forces others to track down the information and do the paperwork themselves or how it causes delays in other processes or departments.

Remind the employee that he or she is responsible for the paperwork. Let the person know, say, that you may have to require him or her to stay late or work on a weekend the next time the employee’s duties are not completed on time.

Once again, this focus on business rather than personal issues should minimize some of the conflict in this situation and signal to employees that they are expected to pull their weight in the organization.

 The Money Management columns are a joint effort of the AICPA and the California Society of CPAs as part of the profession’s nationwide 360 Degrees of Financial Literacy program.