Harmonizing Family Business Dynamics: The Role of Mediation in Sibling Rivalry – Opinion News

By Sougata Ray, Tara Ollapally, Nupur Pavan Bang

Sibling rivalry within family businesses has historically created significant challenges, often leading to unfavorable outcomes for these businesses. The ongoing dispute between Baba Kalyani and his sister Sugandha, of the prominent Kalyani Group in Indiaemphasizes the complexity and consequences of such conflicts. This case mirrors the damaging effects seen in other renowned family businesses worldwide, such as the Ambani The brothers’ feud and the Rothschild dispute in the 19th century underscored the pervasive nature of these challenges and their potential impact on business sustainability and growth.

In addition, countless family businesses are embroiled in protracted litigation, resulting in stagnation or demise due to sibling rivalry. In this context, mediation emerges as a compelling alternative, offering a structured, constructive, rapid and economical approach to resolving conflicts within the family, thus safeguarding the longevity and prosperity of these enterprises. This article examines the transformative power of mediation in resolving such conflicts, through real-world practice case as a background to illustrate its effectiveness and process.

Sibling Rivalry: In family businesses, conflict between siblings can simmer beneath the surface, exacerbated by competing visions and divergent paths. Often the rivalries arise from deep-seated dynamics that originated in childhood or formative years and resurface when problems arise in adulthood, especially during discussions about succession, inheritance, or leadership responsibilities within the family business. These conflicts are exacerbated by a host of factors, including disparate personalities, ambitions, perceptions of fairness between siblings, and unequal roles and responsibilities.

Moreover, competition for control, recognition, or individual inheritance within the business context further fuels sibling discord. Generational transitions and differing views on the future direction of the company also contribute to clashes over strategic decisions and succession planning.

Take, for example, the case of a successful auto parts manufacturing company run by two brothers, each with different roles and ambitions. Tensions escalated during discussions about business expansion, culminating in a serious altercation in which the older brother seriously injured the younger. Legal proceedings followed, during which the elder brother was charged with “attempt to murder” under Sec 307 of the Indian Penal Code.

Understanding the dynamics: Delving deeper into the roots of the conflict reveals a story shaped by patriarchal influences and familial expectations. The father, a respected figure in the industry, imposed his ambitions on his sons at an early age. While the older brother followed the path set out for him, the younger one pursued higher education and personal ambitions. Eventually the younger brother returned and joined the family business. Disagreements between the siblings over business strategies and asset ownership soon surfaced, threatening both family ties and business stability. Legal proceedings followed.

The role of mediation: In the midst of the legal proceedings, the court recognized the possibilities for a resolution of this very personal dispute and referred the case to mediation. Here the mediator began a journey to unravel the complexities of the brothers’ relationship and uncover the underlying emotions fueling the conflict. The older brother’s sense of entitlement to the larger share was driven by a strong sense of “giving up” sooner to fulfill the father’s wishes. By promoting empathy and compassion, the mediator could help the younger brother see his older brother’s struggle and appeal to his own higher wisdom. The mediator facilitated a transformative dialogue, transcending legal entanglements and preserving family ties.

Key lessons from the mediation process: The process allows for the participation of other key members. This brought with it a better understanding of the emotional and mental landscape of the two brothers and the dynamics between them. The insights the mediator gathered through numerous conversations helped the brothers see their reality more effectively, which was crucial for informed decision-making. The mediator’s ability to connect with the parties on a human level paved the way for reconciliation. By delving into the parties’ emotional landscapes and promoting empathy, the mediator transformed the conflict into an opportunity for healing and growth.

Consequences for family businesses: Disputes in family businesses are driven as much by the emotional experiences of the family members as by the financial and professional appeal of the business. The case study is a testament to the transformative power of mediation in harmonizing the dynamics of family businesses. The trial’s ability to focus on a resolution to a legal victory allowed the brothers to not only preserve the legacy of their ancestral business, but also reaffirm the bonds of kinship. This underlines the importance of proactive conflict resolution strategies in promoting sustainable business continuity and nurturing harmonious relationships for future generations.

In conclusion, mediation is an alternative way to manage sibling rivalry within family businesses. Mediation offers a transformative path to resolution, transcending legal entanglements and preserving family ties. As family businesses continue to struggle with conflict, embracing mediation as a proactive conflict resolution strategy can pave the way for healing, growth and harmonious coexistence.

Sougata Ray and Nupur Pavan Bang are from the Thomas Schmidheiny Center for Family Enterprise, Indian School of Business; Tara Ollapally is co-founder of CAMP Arbitration and Mediation practice.

(Disclaimer: Opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproduction of this content without permission is prohibited.)