There is always the potential for a dispute to suddenly erupt seemingly from nowhere. We know that is simply not the case. The unease sits below the surface. There is always a trigger event which sets off a dispute.
My first learning is that feelings leading to a dispute develop over time. First, you missed out on the corner office, then the pay rise was too low, no promotion then your application to that fully paid conference to Queenstown was rejected. You get a new puppy and want to spend time at home but the hybrid work-from-home application was rejected too. Boom! That was the last straw.
The same happens in business. Two directors working well for years. Amass a fortune. One director has the smarts and wants everything in its place and accounted for tidily. The other is the rainmaker, who loves the business but hates the paperwork. Untidy work sheds, unlabelled stock bays, expenses without receipts. One frustration after another over time all adds up. The trigger event – allowing 3 key staff members time off without discussion. That’s it, communication shut down, everything is in writing now, please.
I have also learnt that there are many reasons why these trigger events tip us over the edge. We have different or non-compatible goals – you like risk-taking, I am risk averse, you want to cash up and get out while the going is good, but I want to stay in the business but don’t have the cash to buy you out, you want to source cheap raw goods from a slim shady and I want an ecologically sustainable supply chain. So on.
Another lesson is that the truth will set you free and as the saying goes, the truth hurts. Jeff Bezos (the creator of Amazon) gave a fascinating insight into how his businesses operates when he explained that we, the people, are social animals. Whilst we work together for profit, we keep the peace and don’t make waves because we all want to get along. However, Bezos explains, there is a need for straight talk, what he calls ‘truth-telling’.
I can’t help but think this truth-telling is one way to identify the underlying frustrations and bring these to the surface in a healthy and supportive way with the added benefit of potentially de-escalating disputes. I have also learnt organisations that have systems within their operations to support ‘truth-telling’ fair better, a safe place to talk freely and express yourself without fear.
The more ‘standard’ agreements you have to regulate behaviour, the less likely your problem will be resolved quickly and cost-effectively. Shareholder agreements and memorandums of understanding are tools which are used to manage disputes. These tools are often called up or used way too late in the dispute to regulate behaviour. Often these tools are used when the dispute has progressed well beyond the emergence or escalation of a dispute. The underlying premise or assumption in these documents is that people behave rationally. As I have shown in earlier posts, we, the people, do not behave rationally. At all.
How often do you have thoughts circulating in your head conjuring up manifestations of ideas or scenarios justifying why you are being treated in a particular way? ‘Management has it in for me’ or ‘they are fast-tracking Jonesy to management that’s why he got the corner office’, you get the picture.
Shareholder agreements or memorandums set out steps which parties must follow to get to an outcome, but it rarely works this way.
Here is an extract from a directors’ agreement:
The dispute resolution provisions referred to in this shareholders’ agreement provide for the same process.
My experience suggests these processes are impracticable, particularly in a small business with two shareholders who are also the directors. When it does get to this, and let’s say a mediator gets involved, the business takes a big hit.
I have learnt that the more time you spend on developing active systems and processes to manage disputes the better the chances of surviving a dispute. The dispute resolution process should be developed by the parties themselves and not standard terms and conditions in an agreement. These systems can be facilitated by a neutral, someone well versed in dealing with dispute processes.
Taking time to get in and understand the nature of the dispute, the real crux of the issue is worth the investment. I have also learnt that dealing with emotion helps, trying to focus on the facts and avoiding emotion is dumb. Putting aside emotion means you leave a lot of data and information which will help you understand values and perspectives that are a source of the very tension we are trying to resolve.
This doesn’t mean we get into a meditative state and hum, although not a bad idea, but showing empathy won’t go astray. When you get to the root cause, you can then start to develop a way forward. The business world is riddled with tools to get consensus between competing ideas.
The idea here is to create a risk-free enabling environment where truth-telling can be explored. Now we all need professional development. Skilling-up on interpersonal relationships is also a necessity. We just need to get better at this.
I have also learnt that director and shareholders meetings can be powerful tools. Very rarely do effective director or shareholder meetings occur in small businesses. Instead of issuing notices of a dispute and resolving a dispute in 5 business days, a better approach is to appoint a neutral to attend meetings to observe behaviour followed by 1-on-1 interaction to help development.
Shareholder agreements and memorandums of understanding must be written in such a manner that they are active or live business tools making up part of the Jeff Bezos truth-telling support system. Rather than go through a series of processes and notices treating people as logical robots, encourage people to set their own agenda and processes and have a neutral work the parties through this, using the neutral regularly over time at shareholders and director meetings.
Some of these are my personal experiences where I was actively involved as a participant in a major change initiative. You can read more about this in my Personal Story post, which will be coming soon.
