Note from The Podolny Group

Note from The Podolny Group

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Using Negotiation Tactics to Resolve Owner Conflict

It has never been easy to maintain business partnerships. As in all relationships after the enthusiasm in the beginning there is a natural progression that frequently leads to differences of opinion and loss of communication. But what happens when those differences and losses of communication start to become substantive? What happens when the owners combine serious differences of opinion over company goals and direction with increasing personal friction and animosity? Now we have a serious conflict that if not rectified, can have extremely detrimental effects on the business and the individuals.

Emotions versus Issues

Humans are emotional. When we deal with substantive issues in our lives, it is difficult to be dispassionate and completely rational. In a conflict, owners of a business typically exhibit both emotional and rational arguments. The rational side primarily manifests itself in the tangible business issues such as decisions related to use of funds within the business, direction of the business, roles of the principals, etc. The emotional side, while a component of the tangible business issues, manifests itself full force in issues directed specifically at other owners such as feelings of lack of respect, mistrust, etc.

We define “critical issues” as being as those that an owner absolutely will not compromise. Any of the rational or emotional issues can be critical to a particular owner but rarely are they all critical. The problem that frequently occurs when one tries to mediate these conflicts is that the emotional noise level makes it very difficult to determine which are the truly critical issues.

Counselor or Negotiator

A lot of professionals who get dragged into owner conflict situations take on the role of counselor. They work very hard at getting the various parties to understand what the other side is thinking and feeling. This is a natural reaction. Advisors have empathy for their clients, don’t want to take sides, and want to see the various sides come together in mutual agreement. This counseling strategy can be effective but often can lead to protracted periods of talking without productive progress toward resolution.

Our experience is that the counseling approach can become unproductive in some situations because it does not force the participants to truly examine and differentiate their issues and make hard decisions as to which are critical issues and which are not. In contrast, setting up the conflict resolution process as a negotiation creates an environment where owners are more likely to face their rational and emotional issues constructively and make tradeoffs which lead to productive conflict resolution.

Negotiating Process for Owner Conflict Resolution

After studying the client company in general we get each of people involved to tell us what they would want if they could get everything they desired and what they believe is not acceptable to them. This is put into writing so each person involved can review and edit their terms. These written statements are consolidated into a single document. The points that are in agreement and those that are mutually exclusive are identified.

We then require that each party respond to what the others have said. In a significant number of cases there is more agreement than one would expect on the issues. What are left are the critical issues. Negotiations can now begin. Negotiating is an art not a science and each negotiation takes its own path. It is critical for the negotiator to avoid getting caught up in the emotions of the participants and to stay focused on resolution of the critical issues. At certain points the negotiator may need to put pressure on the participants and provide clarity to the process by pointing out the real negative consequences of not reaching a mutually acceptable conclusion. Our experience is that during this process the participants will ultimately make meaningful compromises on the critical issues that provide the basis for a real resolution.

Conclusion:

Owner conflicts are debilitating to both the individuals and the companies. Resolving them expeditiously may be painful but leads to outcomes where all involved can be best served.

The Podolny Group specializes in conducting owner conflict resolution negotiations. If you or someone you know is experiencing such a conflict, call us.