Resolving conflict in the family business

May 1, 2007 By    

Sibling rivalries. Father–son power battles. Non-active vs. active shareholder issues. Patriarchs unable to relinquish the reins to the next generation. A family-owned propane company’s conflicts come in all types and variations.

 Carl Hughes LP/Gas Magazine Columnist
Carl Hughes LP/Gas Magazine Columnist

There are a few family-owned propane companies that seem to have achieved perpetual harmony year after year, generation after generation. On the opposite side of the spectrum, you’ll find some companies whose internal family “issues” are so severe that they spill over into the public view of their employees and the community.

Most family-owned propane companies fall somewhere in the middle where harmony is occasionally present, but conflicts of one sort or another seem to continue to surface.

Family conflicts, tips for resolution

Non-family businesses have an easier path toward conflict resolution, often by the voluntary or involuntary departure of someone on one side of an issue. This clean solution is not as readily available when a family’s mission is for “entitled full family employment” in the company.

The family business is a collision between basic family values of unconditional love and acceptance with the business environment of accountability, performance measurement and competitive achievement.

Before we offer some suggestions, let’s address some basic facts about conflicts in a family-owned propane company.

It is wrong to think that once you resolve a particular conflict, the harmony you created will continue into the distant future. The combined natural dynamics of the family and business will be a source of new issues with opposing views.

Conflicts can be good for the business and family. They may force resolution on issues that need to be addressed. Also, the resolution often becomes a catalyst for positive change in the organization or the family.

Ignoring a conflict is not resolving a conflict. Some family businesses tiptoe around issues for years without resolution. Putting off issues in this setting generally makes solutions more challenging because the stakes grow higher and resentments become deeper-seated.

First, understand that you should not expect to eliminate conflicts in the organization, but you should expect for the organization to create a culture that addresses conflicts in a positive way.

Second, hold a discussion with all of your family members annually to address what is important to each of you and where you want the business to go.

Perfect consensus may not be realistic, but allowing input from all parties can go a long way to clear the air of false expectations and allow for healthy expression of positions and interests.

Shareholder rights, responsibilities

Small shareholder issues can become large over time. A common propane industry example is the resentment that builds within a working family member who has the same ownership rights as a non-active family member, yet whose contribution in building value over the years has been much greater. Honest and candid discussions among all shareholders on an annual basis are required in order to lay out expectations on distributions, liquidity needs of shareholders, risk expectations and shareholder rights.

Communication is key

Consider these simple communication tips:

  • Create a formal, safe environment for regular discussion of serious issues among the players.
  • Clarify in your own mind what you consider the core issue to be before you speak.
  • Don’t bring up old “baggage” or irrelevant matters during these discussions. That only takes focus away from the core issues.
  • Be willing to negotiate. Hardline positions that you take can be the barrier to reaching resolution.
  • Be honest about your position. Hidden agendas often are the source of issues.

Those family-owned propane companies that have a shared vision of the company, communicate well and have clear shareholder rights and responsibilities have the least stress over conflicts. They also seem to resolve issues to the benefit of the family and business.

Carl Hughes is vice president of business development for Inergy LP. He can be reached at
Chughes@InergyServices.com or 816-842-8181.

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