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To keep family conflict from boiling over, turn off the heat

Wealth adds complexity to family drama, but clashes can be cooled with communication and conflict management

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For better or worse, the potential for conflict exists anytime people interact. Whether it is within a family, a business or a social group, disagreements are bound to arise when different interests and communication styles come together.

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Having practiced as a litigation lawyer for more than 12 years and having been involved in many highly adversarial lawsuits, I’ve developed a clear sense of the factors that can lead to a swift and reasonable resolution – as well as those that can turn a simple dispute into a costly, never-ending battle.

No matter how messy a lawsuit with unrelated people can become, at the end of the day, all parties could walk away from each other and cut off future contact. Unfortunately, it is never quite as cut-and-dried when family members are involved.

Given the interdependent nature of most family relationships, cutting ties is usually not a possibility, nor a desired outcome. Adding a family business, shared wealth and/or common properties to this equation further increases the complexity of family dynamics and can make effective conflict management more challenging.

Developing skills as a family and having advisors who can help with effective communication and conflict management are important components of any successful family governance structure and wealth transition plan.

Issues affecting families of wealth

While each family has unique dynamics that shape the way conflicts are handled, identifiable patterns often emerge in families of wealth.

First, it is common among business-owning families or those that share assets to have different family members balancing many roles at once. For example, one individual may be the founder and chair of a large and successful business, a mother to three children (one of whom is transitioning into a CEO role at this business), a wife to a husband who is a director of the business, a sister to three siblings (two of whom are employees of the business) and a daughter to parents who are beneficiaries of the business. It is easy to imagine the conflicts of interest and motives that can arise when family members have to juggle these roles, and how this can lead to conflicted motives, tension and friction within the family.

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Siblings from families of wealth may not have much experience arguing over the use of the family car. Yet this can provide invaluable experience in managing and resolving conflict.

In addition, families of wealth can sometimes be at a disadvantage in the development of strategies for healthy conflict resolution. Growing up in a family with significant means can provide a higher level of independence and less of a need to rely on other family members, thereby reducing interdependence within the family. With this increased level of individualism comes less opportunity to develop skills such as negotiation, compromise and co-operation.

For example, siblings from families of wealth may not have much experience arguing over the use of the family car, claiming the bathroom or sharing a bedroom. Yet as petty as these squabbles may appear, they provide invaluable experience in managing and resolving conflict, which will provide them with important relational skills as they grow older.

Whatever happens in the younger years, the chances of interdependence increasing later in life grows, particularly for families who find themselves becoming co-owners of property, partners in the family business or co-beneficiaries of various trusts. Family businesses are mostly “accidental,” since people don’t choose their families and, in most cases, probably didn’t intend to work together with them.

Other grounds for conflict may include perceptions of favoritism from parents, perceptions of unfair wealth distribution or decisions to enter or not enter the family business. It’s really no surprise that conflict is commonplace in most financially successful families. As family advisors, we often see firsthand the challenges of this conflict and the rewards available from implementing effective conflict management strategies.

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It’s all about communication

Poor communication within a family can lead to a range of deleterious effects and is at the centre of most breakdowns in relations. Improving communication in a family with distant or tense dynamics is difficult and requires concerted effort (including time and money) – especially by family leaders, who unfortunately may be the least communicative of the bunch.

Most families of wealth are used to prioritizing investments, tax planning and other “hard” strategies to ensure the financial health of the family. Unfortunately, this can be at the expense of the “soft” priorities that affect the social and emotional health of the family.

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Engaging the rising generation as partners in planning for the future can be a great way to enhance communication and collaboration. It tends to give rise to openness in sharing ideas, issues and concerns, as well as a greater willingness to hear other perspectives and accept the decisions ultimately made. Implementing clear family governance structures and holding regular family meetings are also great tools for improving communication, holding members accountable and measuring progress over time.

Bringing in external advisors

When a conflict threatens to upend a family business or family relationships, it may be time to bring in professionals trained in conflict management. It can be extremely beneficial having a professional third party listen to family members on neutral territory and be able to deconstruct the circumstances to get to the root cause of conflict.

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We have seen firsthand how this process can be transformative for families stuck in destructive conflict-avoidance habits or in more open conflict for many years.

Beyond the immediate resolution of any longstanding conflict, engaging professionals and participating in these processes can also lead to personal growth in addition to improved family relations.

Learning conflict-resolution strategies

Not all family conflict requires external advisors or facilitation. Family members can educate themselves in effective communication strategies, dispute resolution processes and mediation practice. When combined with a good faith effort to understand the substantive issues behind conflict, family members can participate directly in negotiation, advocacy and, ultimately, in resolution.

For this to be successful, all family members must be willing to listen, engage directly with others in a co-operative manner, and of course to be willing to compromise to some extent. As family advisors, we often help guide families through these strategies and work with them to ensure everyone is on the same page and that everyone is actively participating in these efforts.

As a family office, our part in encouraging better communication often includes clarifying everyone’s objectives, bringing all facts to the table and providing an open forum for conversation.

Conclusion

Conflict among family members is not only common, it’s normal. Wealth adds an additional layer of complexity that can often lead to more discord if effective communication and conflict management is not prioritized. How a family handles conflict will be a driving factor behind achieving unity versus dysfunction.

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Unresolved conflict is generally a symptom that the family dynamics need some work and would benefit from communication skills training. While avoiding conflict is not a productive or long-term solution, the way it is managed will make all the difference in how successful, functional and happy family members will be in the future.

Sandra De Carolis, BA, JD, is Vice President of Strategy and Development at Northwood Family Office in Toronto. She is responsible for business development, strategic engagement efforts and strategy initiatives at Northwood, which looks after the investments and integrated financial affairs of wealthy families with $10 million or more. Prior to joining Northwood, Sandra was a partner in the Insurance Group at Torkin Manes LLP, where she managed a broad litigation practice including contractual/commercial disputes, breach of fiduciary duty, personal injury, property damage, environmental damage, medical negligence, professional negligence and coverage opinions in a wide range of industries. Check out Northwood Family Office’s quarterly newsletter The Northwood Perspective.

Sandra De Carolis
Sandra De Carolis

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