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How to avoid internal conflict at your family business

On Behalf of | May 31, 2022 | Labor & Employment Law

Family businesses can face dissolution when key players and employees can not agree on essential matters or their personalities clash. In addition, conflicts can arise when senior managers have inconsistent policies for family and non-family employees.

These are some critical steps you can take while leading your family’s Texas business to avoid potential conflicts or mitigate their effects.

Define each employee’s niche

Senior family members can have emotional attachments to including their younger relatives in their companies’ operating and succession plans. However, sentimentality can come at the expense of the bottom line when family members’ talents, skills and motivations do not suit their roles. An objective assessment of all employees’ goals and capabilities can help you determine how and if your relatives can help your business succeed. Also, it is advisable to have close relatives work in different departments to avoid potential conflicts and rivalries.

Standardize compensation and benefits

Whether your employees are all relatives or a combination of family and non-family members, it is critical to understand how reimbursement can be a source of conflict in your business. Be sure to create a pay and compensation structure that is the same for everyone. This strategy will promote healthy morale among all employees and ensure your relatives remain accountable for their performance.

Maintain professionalism

Anyone who employs relatives alongside non-family members should maintain a professional attitude with all staff members. For example, avoiding nepotism is critical for ensuring high morale and performance among non-family employees who may otherwise challenge your ethics and employment practices if they perceive discrimination regarding compensation, promotion and credibility.

Leaders of family businesses who want to benefit from hiring their relatives must create and enforce formal employment contracts and policies to avoid undermining their business’s long-term success.