Conflict is inevitable in family-run businesses. Learning how to manage it and channel it productively is an important skill for entrepreneurship students who may someday manage their own family's firm.
This classroom exercise helps them identify productive and non-productive ways to disagree. It is based on our own research about how conflict affects owners of small to medium sized businesses (Sorenson, 1999). Students first complete a questionnaire that assesses how their families handle conflict (Rahim, 1983) and then compute scores to develop a conflict profile. The professor then discusses the theoretical framework on which the measure was based, and discusses five styles of conflict management and how those approaches can affect business and family outcomes. Finally, the professor asks students to share how their own families utilized the five styles and what happened as a result.
Each business family develops its own approach for resolving differences. Research shows that the approach to managing conflict affects family relationships and business performance (Sorenson, 1999). To help students understand the impact of different approaches, you will 1) ask students to complete a questionnaire about the conflict management approach used in their family, 2) discuss the five conflict management approaches and summarize research that reveals outcomes associated with each style, and 3) obtain examples from class members regarding each style and its impact.
Distribute the questionnaire (download Exhibit 1), which is a short version of the original questionnaire developed by Rahim (1983, see also Sorenson, 1999), and asks students to compute scores using the score sheet. The profile provides a summary of approaches most and least used.
If students have a family business, ask them to focus on members of the business family when completing the survey. Students might want to ask others in their family to fill out the survey to compare answers.
The professor distributes the Differences Inventory Scorecard (download Exhibit 2) and asks students to transfer numeric ratings from their survey to the scorecard and compute total scores. Score totals reveal a profile for managing differences representing the five approaches to conflict: accommodate, avoid, compromise, compete and collaborate.
The professor then introduces the conflict framework (download Exhibit 3), which was adapted from Rahim (1983). Each of the five approaches has a different impact on possible solutions and relationships.
Next, the professor discusses the scores and indicates that scores for Collaborate, Accommodate and Compromise tend to correlate. Scores for Compete and Avoid also tend to go together. This means that when Compete and Avoid scores are high, Collaborate, Accommodate, and Compromise scores tend to be low and vice versa.
Then, the class discusses the scores. The professor summarizes the score profile for each family and its impact, and students are asked to volunteer whether their ratings fit one of the two profiles and to make observations about its impact.
Discuss that family and business often overlap greatly in family-run firms, and the approach for managing differences could influence both business and family outcomes. Then, discuss the study in Step 4 below to illustrate potential outcomes.
The 1999 study (Sorenson) surveyed 59 family businesses. Key findings included:
Drawing on the discussion of outcomes described above, ask students to look at their survey results and share stories or illustrations of how their typical approach to managing conflict impacts family interactions, decisions and relationships. Then discuss how regular family meetings to coordinate and plan might improve how differences are handled.
Best governance practices promote a collaborative approach. Organizing a family decision-making group is not always easy—especially in busy families. Here are some suggestions:
After adopting some of these best governance practices, the owning family might consider taking a followup inventory about their differences —to see how much implementing these practices may have made a difference.
Dyer, W.G. (1986) Cultural Change in Family Firms: Understanding and managing business and family transition. San Francisco: Jossey-Bass.
Lewicki, R.J. & Litterer, J.A. (1985) Negotiation. Homewood, Illinois: Irwin.
Seymour, K.C. (1993) Intergenerational relationships in the family firm: The effect of leadership on succession. Family Business Review, 6 (3), 263-281.
Sorenson, R.L. (1999) Conflict Management Strategies Used by Successful Family Businesses. Family Business Review, 12; (4) 325-338.
Rahim, M.A. (1992) Managing conflict in organizations. Westport CT: Praeger.
Rahim, M.A. (1983) A Measure of styles of handling interpersonal conflict. Academy of Management Journal, 26(2), 268-376.
College business professors looking for more ideas to enrich the classroom experience can find them here.