Negotiation Challenges for Family Business Relationships

The importance of communication in business negotiation cannot be overstated - especially when bargaining with family

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Traditional negotiation advice recommends not mixing business and family but this could mean losing out on the potential rewards of working with those close to us and other potentially lucrative business opportunities. Inevitably, family members in business together will have to engage in business negotiations and commercial negotiations together, as part of a team or as negotiating counterparts. So what is the best way to ensure both successful negotiations and continued positive relationships?

One of the first steps in preparing for negotiations with a family member is to consider potential complications that may arise at the negotiation table. Carefully examining the dynamics of interpersonal relationships, interests, and alternatives will help ensure success.


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The Importance of Communication in Business Negotiation

You must also strive for transparency. Underlying family tensions can often boil over intense negotiations. It is important to make sure you are explicit about the potential challenges and issues that may arise during negotiations. Addressing these difficult issues may seem overwhelming, but this process often leads to more successful outcomes.  If you get stuck on a particular issue it may be helpful to bring in a neutral third party such as a mediator to work out the details and help you reach a consensus (see also, Mediators and Business Negotiations: The Benefits of a Neutral Third-Party in Dispute Resolution).

Lastly and most importantly, you must plan ahead. Often sources of conflict can be identified before they reach critical mass. Family members should try and agree to the terms of the business relationship as early as possible and clearly outline the ways in which they will resolve future disputes. It may also be possible to anticipate potential family conflicts in advance and address them before long-term damage to the relationship is done (see also, Business Negotiations: To Avoid Disaster, Plan Ahead).

Family-business relationships are faced with their own unique challenges to negotiation. It is also important to remember that these partnerships are also subject to special legal and financial principles such as nepotism, tax law, inheritance law, and antitrust concerns.

Have you ever done business with family? Share your negotiation experiences with us in the comments.


Build powerful negotiation skills and become a better dealmaker and leader. Download our FREE special report, Negotiation Skills: Negotiation Strategies and Negotiation Techniques to Help You Become a Better Negotiator, from the Program on Negotiation at Harvard Law School.


Originally published June 2008.

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