The Huge Cost of Being Right

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The reality is the bottom line when it comes to resolving conflicts and disputes in business.

Like it or not, conflict between people is inevitable, yet fair and acceptable resolution is not. In business as in life, people interact and their differences lead to conflict and, often, to dispute. As Roger Fisher, William Ury, and Bruce Patton wrote in their influential book, Getting To Yes, “Whether in business, government, or the family, people reach most decisions through negotiation.” Processes dating back to ancient times and cultures have been labelled as alternative dispute resolution (ADR) strategies and are increasingly preferred for resolving business and personal disagreements.

As was so often observed in many of the conflicts we were asked to help resolve, the following three teams of business owners had to make vital decisions when negotiations failed, resulting in disputes that took on a life of their own. (Names and some details have been altered to protect confidentiality).

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Home-based business vs. strata council
Bill Jones wasn’t worried when illness waylaid him. Optimistically, this 45-year-old entrepreneur decided to refocus his time and energy in a home-based business. He would market previously owned treasures through an Internet auction site with the help of his wife and teenage son. Their townhouse almost paid for, Jones thought he was secure in his home office and showroom-warehouse. Until one of his neighbours objected.

His strata council told him to cease and desist, and in that moment of heightened stress and anger, all Jones could see was a long battle ahead with little guarantee of success. With little thought for the consequences, he didn’t comply with or even answer the directive, generating a predictable reaction from Charles Stewart, the council president.

From there, the dispute became increasingly personal, pitting neighbour against neighbour. A court finally settled the dispute and everyone walked away tense and angry. Jones and his family had to move and significant residual tensions remained between some neighbours. So who won? Everybody lost, and unnecessarily. Jones would have done well to heed Sun Tzu’s 2,500-year-old aphorism: “The smartest strategy in war is the one that allows you to achieve your objectives without having to fight.”

In a case with similar issues, home-based businesswoman Beth Brown spent time with the strata council chair to reach a mutual understanding first about what was important to each party. Agreeing they shared values about community spirit and neighbourliness made it easier to resolve differences amicably about her at-home business activity. Brown assured the council that clients would no longer be coming to her home and wandering around the property and, at the same time, she was satisfied since she could carry on her business while remaining friends with her neighbours and co-owners.

Partners’ blow-up over ‘widgets’
Jon and his dad William White joined with Samuel and Patricia Green to realize their common dream of owning and managing a small manufacturing business. For the first five very busy years, all worked diligently as friends and colleagues. Father and son marketed the products and handled administration, while the couple managed production and distribution.

Then one day, a verbal explosion between two of the partners exposed an underground conflict. Ostensibly over administrative practices, the flare-up quickly deteriorated into areas like how hard each worked, surprising both partners by the vehemence demonstrated by the other. Clearly what had been percolating below the surface had now boiled over, bringing their enterprise to the brink of disaster. When their bank manager, also a friend, heard a brief description from William White about what was going on, he recommended an industrial mediator. The divisive differences, by now, had invaded all parts of the owners’ personal and professional lives, and all were quick to agree.

The mediator helped the owners acknowledge their common dream, so the four challenged their “conflict monster” — their common threat — instead of each other. Curiosity replaced judgement as they collaboratively problem-solved and established open, active lines of communication and a conflict-resolution process for future differences. Ten years later, their business has grown beyond what even they had envisioned. The experience of resolving that first big blow-up has undoubtedly helped their success.

J & K Resource Centre dispute
Jane Black and Katherine White’s problems began when the partners became drawn into a staff conflict between their two office administrators, Betty Brown and Alice Gray. As the conflict spiralled out of control, each of the disputants targeted either Jane Black or Katherine White or both, triangulating to gain support. Now, with the entire staff involved, communications came to an abrupt halt, as did all but day-to-day operations. White became so frustrated, she gave up her share of the enterprise, preferring to take a financial loss and move on with her life. Today, their dream of a “bliss station” offering counselling, therapy, massage, books, and coffee, is history.

Interestingly, White recently told me that the whole mess might have been prevented if she had joined Black to resolve the dispute between their office administrators.

Alternatives to a War of Words
The list of potentially devastating business disputes is almost endless, but business contracts, malpractice, liability, outstanding debt, partnership dissolution, and intellectual property issues are all on the current “hit parade” of disputes ending up before judges or arbitrators. If you doubt that dispute resolution is a fast-developing growth industry, look under “Lawyers” in any city’s yellow pages directory.

Whatever the details, the bottom line on business conflict is that when differences have not been resolved to everybody’s relative satisfaction, people will do whatever it takes to gain a “fair” remedy. According to the American Bar Association, 95 per cent of all business litigation settles prior to trial. So, why do people keep choosing the court option to settle differences when appropriate alternatives such as conflict coaching, mediation, and conciliation have proven to be so beneficial, expedient, and cost-effective?

In the 25 years since Fisher and Ury first published their findings from the Harvard Negotiation Project in Getting To Yes, much has been learned about conflict, how it grows, and how to manage and resolve differences. As the sadistic captain of Road Prison Gang 36 said to Paul Newman in the 1967 movie, Cool Hand Luke, “What we got here is a failure to communicate.”

Since all conflicts will be resolved, sooner or later, satisfactorily or not, the decision about avoiding, collaborating, or taking the war-like adversarial road to get what we want or need must be made daily. Next time you encounter challenges involving differences that seem to be moving towards conflict, hit the pause button and choose an appropriate resolution process. Consider how much winning or losing will cost you from the broadest possible perspective.