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How to resolve conflict in family businesses
Written by Becs Bridge on 25 September 2025
Working with family members can be one of the most rewarding aspects of running a small business – or one of the most challenging. This type of business often benefits from deep trust, shared values, and unwavering commitment, but navigating internal dynamics and UK employment law requirements isn’t easy, and when conflicts arise, they can be far more complex and emotionally charged than typical workplace disputes.
While headlines often spotlight family business disputes in large, well-known corporations, you don’t need to run a global empire to encounter these difficulties. A family business feud can affect companies of all sizes and can be particularly challenging for small to medium employers to manage. So, what makes these conflicts unique, and what you can do to prevent and resolve them?
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The unique challenges of conflict in a family business
Family business feuds are often more complicated than typical workplace disputes due to a number of factors:
- The personal stakes are higher: When conflict arises between family members in business, it’s never just about work. Every disagreement carries the weight of family history, sibling rivalries, generational expectations, and personal relationships that extend far beyond the office. A dispute about marketing strategy might really be about who has the right to make decisions, while a disagreement over hiring could stem from deeper issues about succession planning or perceived favouritism.
- Blurred boundaries: In traditional employment relationships, there’s a clear distinction between professional and personal interactions. Family businesses blur these lines. Work conversations continue over dinner, business tensions affect social gatherings, and professional disagreements can quickly escalate into personal conflicts that damage relationships permanently.
- Complex power dynamics: Family hierarchies don’t always align with business roles. A younger sibling might be the CEO while their older brother works as a department manager, creating tension between birth order and professional authority. Parents may struggle to treat their adult children as equal business partners, while children might find it difficult to challenge their parents’ professional decisions.
Reasons for conflicts in family businesses
Disagreements can range from day-to-day decision-making to long-term strategic choices – but in our experience, they often boil down to a few recurring themes:
- Unclear roles and responsibilities: Many family businesses operate on informal agreements and assumptions rather than clearly defined job descriptions and reporting structures. This ambiguity often leads to disputes over decision-making authority, accountability, and expectations.
- Compensation and equity issues: Determining fair compensation for family members is notoriously difficult. Should pay be based purely on performance and market rates, or should they receive preferential treatment? Equity distribution can be even more contentious, especially when some individuals contribute more time, money, or expertise than others.
- Succession planning challenges: The question of who will take over the business often creates significant tension. Multiple children might feel entitled to leadership roles, while parents may be reluctant to step back or make difficult choices about succession.
- Different visions for the business: Family members may have fundamentally different ideas about the company’s direction, growth strategies, or values. One generation might prioritise stability and tradition, while another pushes for innovation and expansion.
Family business conflict resolution strategies
If your business involves family members working together, it’s important to have structures and processes in place to reduce the risk of conflicts and keep relationships and the business on track:
- Establish clear governance structures: Conflict resolution in a family business can begin with formal policies that separate internal fighting away from the goals of the organisation.
- Implement an employment policy: Develop guidelines for when and how family members can join the business. Consider requiring them to work elsewhere first to gain external experience, meet specific qualifications, or go through formal interview processes.
- Hold regular business meetings: Schedule separate meetings for family matters and business issues. These meetings should focus on communication, relationship maintenance, and long-term planning, while business meetings address operational concerns.
- Engage neutral advisors: Appoint an independent board member or external specialists – such as family business consultants, accountants, or lawyers – to provide objective guidance, prevent conflicts, and keep disputes from becoming personal.
Top tips for managing conflict in a family business
Even with preventive measures in place, disputes may still arise. Here are strategies to manage them effectively:
- Address issues early: Don’t let small disagreements fester. Family members often avoid confronting issues because they fear damaging personal relationships, but unresolved problems typically escalate and become more difficult to address.
- Separate the person from the position: Focus discussions on business issues rather than personal characteristics or family history. Use phrases like “I disagree with this approach” rather than “You always…” or “You never…”
- Create safe spaces for dialogue: Establish ground rules for difficult conversations, such as no interrupting, no personal attacks, and focusing on solutions rather than blame. Consider using a neutral location away from the office and home.
- Consider temporary separation: Sometimes family members need time apart to cool down and gain perspective. This might mean taking turns attending meetings, working different shifts, or even taking extended leave to reassess the relationship.
- Seek professional support: WorkNest’s professional mediators provide a neutral space to address disputes, clarify issues, and work toward mutually acceptable solutions, while our Employment Law specialists can offer guidance on any legal matters that may arise.
Sometimes, despite best efforts, family business relationships become irreparably damaged. In such cases, it may be necessary to bring in external management to run day-to-day operations, or to restructure roles or consider buyout agreements to minimise interaction between conflicting family members.
Family business conflict examples
In the UK, family businesses represent 93% of all private sector firms – over 5 million companies – highlighting the potential scale of the issue. As the Murdoch legal battle and new Netflix show House of Guinness demonstrate, conflicts within family-run businesses are common, creating operational difficulties, straining relationships, and sometimes even leading to costly legal disputes.
Family business disputes are challenging as they can involve the two most important aspects of many people’s lives: their family relationships and their livelihood. However, with proper planning, clear communication, and professional support, these conflicts can often be resolved or even prevented entirely.
The key is recognising that successful family businesses require the same professional standards and practices as any other company, while also acknowledging and addressing the unique emotional and relational dynamics that come with working with loved ones.
Remember, the goal isn’t to eliminate all conflict – some disagreement is natural and can even be productive. The objective is to manage disputes constructively so they strengthen rather than destroy the business and the close relationships that make it special.
Don't let family business feuds ruin your success
At WorkNest, we understand the unique challenges facing family businesses across the UK. Our comprehensive range of services and learning and development solutions are specifically designed to help you build stronger foundations, prevent conflicts, and manage disputes more effectively when they do arise. These are custom designed to support conflict resolution in family businesses.
Enlist professional HR support:
- Outsourced HR services: Objective, experienced guidance free from family dynamics.
- Policy development and implementation: Family employment policies and governance structures that comply with UK employment law.
- Mediation and conflict resolution: Neutral HR professionals to help resolve and manage disputes constructively.
Explore our learning and development solutions:
- Training in conflict and communication skills: Learn how to address disputes constructively, improve family member communication, and separate business discussions from personal relationships.
- Leadership and management development: Equip your leadership team with the skills to successfully
manage your family business, ensuring smooth leadership succession and securing your company’s long-term success and legacy. - 121 coaching and bespoke workshops: Confidential, professional guidance tailored to your family business challenges and the needs of individual family members.
Get expert legal guidance:
- Dedicated professionals: Your own small team of experts, on hand to help resolve employment-related matters, however big or small.
- Unlimited advice: On complex UK employment law matters that commonly affect family businesses, including help with restructures and redundancies complicated by internal dynamics, flexible working arrangements that balance family and business needs, and grievance and disciplinary procedures that ensure fairness for all employees.
- Employment contracts: Compliant, business-relevant contracts, providing a clear foundation for managing disputes and setting expectations from the outset – essential for family businesses that may not have formal agreements in place.
Whether you’re a large, multi-generational organisation planning ahead to prevent future conflicts, or a smaller company facing a dispute, WorkNest offers nationwide UK coverage, flexible service options, and industry expertise. For support, contact our team on 0345 226 8393 or request your free consultation using the button below.
