Top 5 sources of conflict identified in Australian family owned businesses

Kirsten Taylor-Martin, Partner Private Business, Tax & Advisory at Grant Thornton

According to new research from the 2021 Family Business Survey 83%of all Australian family businesses have experienced some sort of conflict during the last year.

The Survey found the most common source of conflict, as experienced by one-third of family businesses, as the task of balancing family needs and business needs.

Planning for the future was the second major source of conflict.

Family businesses, a major piece of Australia’s economy

According to the 2021 Survey, the average Australian Family Business turns over $22 million in annual revenue and employs over 60 people.

Family Business Australia found that the family business sector is worth about $4.3tn and accounts for 70% of all businesses, employing around half of the country’s workers.

Family businesses operate under unique circumstances where managerial decisions are often made based on responsibilities toward relatives in the business.

These common sources of conflict should be resolved in order to provide effective business management and identify growth opportunities, as well as security for employees.

Sources of conflict in Australian family businesses

1.      Balancing the needs of the family vs the needs of the business (31%)

2.      Future vision, goals and strategy of the business (26%)

3.      Family member communication style (24%)

4.      Succession-related issues (24%)

5.      Managing growth (20%)

Kirsten Taylor-Martin is a Partner Private Business, Tax & Advisory at Grant Thornton.

“Guided by experience and knowledge of family businesses, an independent facilitator can establish the structures and forums to address conflict, enabling open and honest conversations about the direction of the business to prevent conflict and lead to profits.”

“At Grant Thornton, we absolutely work with all members of the family within the business to make sure everyone’s wants and needs are met, and outcomes are aligned with each of the family member’s objectives to the benefit of the whole family.”

“As family member communication style is an issue for a quarter of respondents, independent facilitation eliminates this concern as each member is heard and understood.”

“Professional management provides guidance on succession, growth and financial stress.”

Other conflict issues include business survival (16%), remuneration of family members (15%), and competence of family members working in the business (15%).

Surprisingly, sibling rivalry was ranked the lowest as a source of conflict at only 5%, and this low ranking is consistent with the Family Business Survey findings from previous years.

Fortunately, 17% of family businesses experienced little or no conflict during the last 12 months, which is heartening considering the constraints felt by the Covid-19 pandemic.