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Business Mediation: Strengthening Partnerships for the Long Haul

Business partnerships are similar to marriages.  They depend for their vitality and longevity on the strength of the partners’ relationship as much, or perhaps even more, than on the health of the business. Consider the problems encountered by these two very different partnerships.

Sophia and Kathy were close friends, having met at a parents’ night for their 3rd grade daughters, and discovered the many things they had in common, including restlessness from being full time mothers.  After countless afternoons remembering their past achievements in the workplace, they came to the conclusion that they, as a pair, should consider becoming business partners.  Finding the right business took more time, but after researching the marketplace and considering their skill sets, they decided to start a business helping individuals to organize their houses, their lives, or even specific projects.  Sophia had organizational experience as a business consultant and Kathy had worked as a personal coach, helping women to re-enter the workplace.  The launching of a service business seemed ideal; they could work part-time, adjusting their business schedule to allow ample time for their families and particularly for their children.  They would not have to travel or work long days; they could continue to attend athletic events, school plays, or just hang out with the kids.

Sophia and Kathy approached the start up of their business venture with enthusiasm and energy.  They put up some seed money, found an office, and sent out announcements.  Their partnership deepened their relationship.  They were in this venture together, as friends and as business partners.  In the early years when revenue barely covered overhead, all was well with them.  Ironically discord developed when the business started becoming a success enterprise.  The more revenue the business produced, the more disagreements arose between the two women.  They argued about who did more work and therefore should receive more of the profit; they argued about hiring or not hiring employees; they argued about just about everything.  The relationship was foundering even as the business was succeeding.

Our second example presents a story of two brothers who had escaped the tensions of sibling rivalry, and to the joy of their parents both chose not only to become audiologists, but also to open a retail store for testing hearing and selling hearing aids.  Their parents lent them the start up money and off they went on their new venture.  Success came more quickly than they anticipated, resulting in a small chain of stores in three different towns.  Alex, the older brother, was the sales person and business manager. Paul, the younger brother, was the clinician, encharged with testing and diagnosing of patients.  Overtime, they employed several other family members, one, a first cousin, became an equal partner. As good as this sounds, there were cracks in what seems like a success story.  Alex felt that he should draw a higher salary given his responsibility for managing the three-store business.  Paul wanted to spend more time with his family, and argued for increased personnel to be assigned to visiting patients’ homes to check and adjust the hearing aids. The third partner was caught in the untenable position of having to listen to each of the brother’s saga of complaints, not to mention their parents who kept asking him what was happening with their sons and why he could not help to rectify the deteriorating situation.

 Here we have two business success stories.  Both ventures, started with little more than a dream and the energy of their creators, grew into income-generating enterprises.  Yet success brought with it conflicts and disagreements, a development that none of the partners would have envisioned in the lean years when building the business and sharing their dreams had substituted for money.

The key question facing each partnership was how to handle the conflict.  Were the personal differences too great to maintain the business relationship and, if the partnership could be maintained were changes in the structure of the business needed? In both cases, mediation was recognized as a process to deal with the personal and professional discord, discord that easily could spill over resulting in damage or even the destruction of the business.

Mediation at the Centre for Mediation and Dispute Resolution (CMDR) is a problem solving process and, as such, results in solutions and settlements that are unique to each situation and to the actors involved in the situation.

In the first example given above, Sophia and Kathy agreed to go their separate ways.  They worked together in mediation to divide the hard assets of the business, which were not many, and to consider how personal contacts and relationships with referral sources would be treated.  Because both women wanted to maintain their friendship, indeed return to the early days when their friendship was the bond between them, they focused on how each could emerge from the dissolution of the partnership and move forward without undue regret and anger.

In the second example, the brothers and their cousin did not dissolve their business relationship as a result of the mediation.  Instead, they restructured roles and responsibilities along with salaries and profit division.  They worked to put aside their personal complaints and biases in order to focus on the business itself. In the final analysis, they were able to reshape the management of the company and each of their individual responsibilities to match each partner’s personal needs and plans.

Mediation is not an easy process. Although it does not require participants who think alike or who are expert communicators, it does require a willingness to listen and to think, as well as a desire to reach an agreement.  Moreover it requires a mediator who is adept at helping individuals to identify the issues and to open the solution space to consider different alternatives and approaches—to, in effect, think out of the box.  The mediator and the participants are in the process together, as a unit they need to focus on devising an agreement that leaves all participants feeling that the final settlement is not only fair but also will work.


Lynne Halem

Dr. Lynne C. Halem is the director at the Centre for Mediation & Dispute Resolution in Wellesley, MA. Dr. Halem has worked in the mediation field since 1982. She is on the Family Dispute Service Panel of the American Arbitration Association and a past board member of the Divorce Center,… MORE

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