Handling business disputes when they involve family

Many businesses across New Mexico are family businesses. Even if they didn't start that way, business owners might hire family as time goes by. There are numerous benefits to working with family, like supporting each other and sharing in the success of a company.

However, there are drawbacks, as well. Disputes between family members who work together or for one another can quickly sour both the familial and the professional relationships. As such, it is important for business owners and employers to know what they can do in such situations to prevent them from causing irreparable damage.

  1. Lay the groundwork. Setting expectations and ground rules from the start of any business relationship with a family member is crucial. It ensures everyone understands their role and what they must do. Employers might have family employees sign non-disclosure agreements, for instance. Or they might hire the person as a contractor so that there is a specific end date to their employment. Parties should also understand clearly who is in charge, who can make decisions and how to communicate regarding the business.
  2. Setting a plan for dispute resolution. Decide in advance how you plan to resolve conflicts. If they are minor disagreements, you might agree to have a third party make the decision, for instance. In more serious instances, legal measures like mediation, or possibly arbitration, can be effective. 
  3. Pursue mediation. As mentioned above, mediation can be a prudent option for dispute resolution when you cannot resolve conflicts on your own. This process prioritizes cooperative, peaceful resolutions, which can preserve at least the personal relationship in the long run.

These tips can be helpful in minimizing long-term damage and conflict, which is crucial when family and business combine.

However, preventing these disputes altogether can be the most effective way to maintain familial and professional peace. This Forbes article has some helpful suggestions for how to do this, including establishing stringent payment plans and simply making a policy against hiring family members.

Combining family and business can be successful, but there are challenges that often arise in these situations. Preparation and a clear understanding of how to resolve disputes can make it easier for the combination to be successful.

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