Summary of Chapter 4: Predictable Conflicts in the Intersections

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Recommended: family business models

In this week’s reading, Chapter 4: Predictable Conflicts in the Intersections, discussed the dynamics of conflicts that exist within the family business as it relates to family, ownership, and management, which is also known as the three-circle model. This model derives from a breakdown of the two key elements of business, management and ownership. When the family is combined with business it is highly likely for paradoxes to stem from one of the three circles and the conflict becomes and paradoxes become more complex because the three circles are so closely connected and dependent upon each other. According to the reading, a problem, or a situation that reflects perplexity or difficulty is a result of underlying conflicts. The underlying conflicts are actual or perceived opposition of needs, principles, and/or interests. The contradictions are competing points of view, which births the paradoxes the business faces. (Schuman, A., Stutz, S., & Ward, J.L. 2012, p. 78)
The conflicts that stem from this model are separated into three categories by the authors which are family-management conflicts, family-owner conflicts, and management-owner conflicts. The family-management conflicts would include family employment, family member compensation and perks, retirement age, leadership succession, and family decision-making. (Schuman, A., Stutz, S., & Ward, J.L. 2012, p. 80) The management-ownership conflicts would include board make-up, distributions and dividends, risks and growth goals, family redemption or liquidity, and transparency of personal estate plans and financial stability. (Schuman, A., Stutz, S., & Ward, J.L. 2012, p. 83) The family –ownership conflicts would include stock ownership, family meeting agendas, owner succe...

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...g was very organized, detailed and easy to follow. The examples present in the charts for each of the three circles really paints the picture really clear for the reader. This chapter makes it very clear that paradoxes may have different origins and they need to be classified properly in order to adequately manage the paradoxes. The authors say it best, “ The most effective means of handling these problems is to analyze the conflicts associated with them for inherent contradictions, then to dig deeper, in search of the primary underlying paradox and ultimately to address the paradox with strong governance vehicles (such as policies, rules, or values), including the use of a family constitution.” (Schuman, A., Stutz, S., & Ward, J.L. 2012, p.90)

Reference:
Schuman, A., Stutz, S., & Ward, J. L. (2010). Family business as paradox. New York, NY: Palgrave MacMillan.

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