General Practice, Solo & Small Firm DivisionMagazine
VOLUME 19, NUMBER 2 MARCH 2002
BUSINESS AND COMMERCIAL LAW
Not All Business!
Mediating the Personality Differences Behind Internal Business Disputes
By David F. Gage and John A. Gromala
Mediation is recognized as an excellent means to resolve disputes and pending litigation. But it is also being used to prevent disputes from arising among partners and shareholders of small businesses and professional groups, and among management teams.
We have mediated the dissolution of many partnerships and closely held corporations. A common thread ran through every conflict. Although opening positions were couched in terms of lack of profits, broken agreements, and so on, these disputes were seldom the real cause of the problem.
Management teams in larger organizations are usually put together with existing staff to achieve a specified goal. Everyone makes a commitment to cooperate. Too often, however, the team members get mired down in turf battles. The arguments are phrased in terms of disagreements about the best plan of action. Having mediated a number of management disputes, we have found the reality is something different.
Case study. The owners of a successful business were on the verge of getting into a big brouhaha. They had been in business for six years, each owned one-third, and each took no salary. They shared profits equally.
Bob was a golfaholic who was at the plant about 20 to 25 hours per week. He brought in most of the new business. Jim was a workaholic who worked 50 to 60 hours per week and made sure everything and everyone worked. Tom never ruffled anybody's feathers. He went about his assigned tasks quietly and was on site about 35 to 40 hours per week.
Our initial confidential interviews revealed the following pictures: Jim complained about low profits. In business meetings, he talked about the need for faster growth to increase profits and his income. He believed that he had to put in the long hours because Bob and Tom were not carrying their fair share of the load, but he never told them this. He often hinted he should be entitled to a larger share of the profits because he was putting in more effort than the other partners. However, he never confronted the issue. He liked the others and did not want to risk a blowup-each received about $175,000 per year from the business. Jim believed Tom would agree with him.
Bob believed the company would die for lack of customers if he did not continue his marketing efforts on the golf course and social circuit. He thought Jim spent so much time at the plant because he was henpecked at home. He also believed that the company would be better off if some of what Jim did was delegated to employees. He suspected Jim wanted a bigger slice of profits but refused to open that can of worms. Bob believed Tom would agree with him.
Tom just wanted to get along with everyone. He was happy with his share of the profits and the way business was developing. Tom could not understand why Jim and Bob kept asking him to straighten the other one out but never talked to each other about their gripes. He would not take the side of either Jim or Bob, but he never said that to either of them. He now recognized that his silence caused both of them to look to him as an ally.
Business charters. Our function is to help people design a program that will keep them focused and working together. We guide them as they, not we, draft a business charter. This is the significant difference in the approach of consultants and mediators. Good consultants analyze a situation and present the client with a solution or a plan of action. Even if it is flawless, though, inevitably someone will find something to hate.
The difference is whether the participants can say that it is "my idea" or it is "his idea." Mediators help people develop a solution that they see as their idea. The chance for successful implementation is great because everyone has a vested interest in seeing the plan succeed.
A business charter addresses matters that are not discussed in partnership or shareholder agreements, management structure, or job descriptions. A charter is a non-binding memorandum that clarifies what each person expects of the others and how they will operate together.
We help people understand their own interests, needs, and goals and those of the other parties. With our guidance, they work out a plan for working together. To implement this approach, we have separate confidential interviews with each person. During the interview, we show them how to air their gripes in a non-adversarial and productive manner. When we complete the interviews, we have a complete picture of the relevant issues. We learn about each person's perceptions and the hidden agendas that seldom surface when they meet on their own. We have a picture that none of the partners has seen. Our task is to help them develop this picture for themselves during our conference.
Before the group meeting, we give each person a set of questions developed from what we learned in the individual interviews. We review their answers for the conference, where we facilitate a discussion of all that was previously unspoken. The length of the conference depends on the number of participants and the complexity of the relationships. Notice the reference to "complexity of the relationships" rather than "complexity of the problems or disputes." Although people discuss problems in terms of financial issues, legal problems, or poor management, these disputes are seldom the real cause of friction. The real cause is the people themselves.
Communication skills. College or business courses put very little emphasis on how to be a good partner. The result is that people enter into legally binding business relationships with little thought about how they will harness their differences into a positive force. Many individuals have not thought through their own short-term and long-term goals. By not knowing their own foibles and ignoring their different personalities, goals, and values, they set themselves up for a lot of unnecessary grief and, often, failure.
In our case study, the three partners learned new things about themselves as well as one another. Bob enjoyed most of his time on the course and socializing. However, he hated to be around some of the customers-it was hard work, and he did it just to generate business. One of the customers he disliked was also a pain to everyone at the plant. This caused Jim great stress because the customer often disrupted production. He did not complain to Bob, believing the customer was Bob's good friend. Once this was discussed openly, an avalanche of other hidden issues among all three of them flowed.
All were addressed and resolved. More importantly, the partners learned how to communicate with each other on sensitive topics. This is the most important benefit of the charter process: It showed them how to deal successfully with future conflict and minimized their need for future outside help. Their new charter addressed the current issues and set up a protocol for how they would interact with each other.
By using two mediators with diverse but complementary expertise, the owners and managers are empowered to address issues that previously were taboo. They do it without bruising their egos. The clients receive the benefit of experienced mediators who bring to the table the ability to assist them with the myriad personality issues as well as business and law. The most important benefit to the people we work with is that they learn how to harness their diverse personalities into a productive force. Having learned from the process, they follow through with reviewing the charter at least annually and make appropriate changes.
David F. Gage is the managing director of Business Mediation Associates in Washington, D.C., www.business-mediation.com. John A. Gromala is the principal of Gromala Mediation Service in Eureka, California, and the West Coast director of Business Mediation Associates, www.mediation.adr.com/gromala.
This article is an abridged and edited version of one that originally appeared on page 28 of Dispute Resolution, Summer 2001 (7:4).