Managing Conflicts of Interest in a Family-Owned Property Management Setting

Last modified on April 24th, 2018

It is impossible to avoid all conflict. In fact, for many small business owners, conflict seems to be an every-day-happening. Some business experts suggest that family-owned businesses and small start-ups experience conflicts more frequently than larger enterprises because they fail to follow a “formal management plan.”

Operating a family-owned property management company follows a few common rules of engagement, but the dynamics of each business are unique and complex based on the management team and the clients they serve.

Here are suggestions for keeping the peace in a small multifamily housing community and avoiding conflicts of interest that may impede growth and stability.

Rule Number One:  Establish Roles and Responsibilities

Establish a formal job description for every employee within the organization– family and non-family. In a family-owned business, a dispute over hiring a new employee or vendor can quickly escalate and “overflow” into other areas.  When roles and responsibilities are clearly defined, and everyone stays within their defined boundaries, conflicts occur less frequently.

Rule Number Two: Recognize Strong Performance

Award all vendor contracts and paid employment offers based on merit and experience – not familial relationships or financial backing.  Using employment and contractor vetting tools, similar to resident screening tools available with property management software, eliminates bias toward relatives and family friends.

It is essential to avoid treating family members differently than non-family employees, contractors, vendors and residents. Showing favoritism is just as bad as abusing family relationships. Openly recognize superior performance and discipline or correct bad behavior appropriately.

Rule Number Three: Keep Communication Honest

Never hide family relationships from vendors and residents. Effective communication helps dispel fear and mistrust. Finding out later the new maintenance director is a blood relative may lead some employees to expect their jobs to be eliminated or assumed by family members.

Residents deserve to know the chain of command when conflicts occur. Reaching someone who can approve a viable solution to an irritating problem is easier when property leaders establish clear, open communication policies.

Rule Number Four: Establish Clear Boundaries

Family-owned property management companies often experience conflicts of interest when business and personal issues collide. Business coaches suggest managers avoid loaning company equipment to family members. Allowing family members not actively engaged in operating the business to exploit on-staff IT professionals and tag along on corporate retreats may set the stage for ongoing conflicts of interest.

Co-mingling business and personal finances in a way that “de-professionalizes” business activity could negatively impact the company reputation if not closely monitored.

Establishing a clear boundary that divides work and personal time is critical. Especially when a husband and wife operate a small multifamily management company, personal time can take a back seat to business. Running a business together is exciting and rewarding, but the business can consume couples’ time if healthy boundaries are not established and respected.

By establishing clear hours of availability for residents and balancing work and family time, co-owners strengthen their work and family relationships individually. Management should respect workers free time by setting a work schedule that does not infringe on personal schedules without compensation.

Rule Number Five: Consider a Grievance Council

A family-owned property management company will naturally experience conflicts from time to time. Forming a family council that mediates family matters from redefining the company vision to strategic growth planning may be beneficial.

Sometimes a neutral third-party, such as a professional mediator or business counselor, can guide the team toward productive resolutions. In cases where discord and conflict interfere with daily business activities, it is advisable to hire a professional to facilitate change.

It is impossible to avoid all conflict, but it is possible to implement a formal business structure to lessen the impact.


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