business owners

Mediation and Conflict Resolution

All names and other identifying information have been changed to protect confidentiality.

I was called to work with one of the largest construction companies in the Midwest, which was a recent merger of three very successful smaller construction companies.

“I want you to find out what’s wrong with these employees of mine,” said the president, looking at me across the desk. “These people aren’t putting in the sweat equity they should. In fact, I think a few of them are lazy – some need to be fired. Most are complaining that they haven’t gotten a raise in a long time, but before I go handing out candy, they need to show their stuff and get these back orders out.”

“Back orders?” I asked.

“Yes,” he said. “We have $40 Million in back orders we cannot fill, and the bank is telling me I have 90 days to get it fixed, or they are calling in the loan. We may fold before spring if these lazy employees don’t get cracking.”

The president (we will call him Max) gave me a bit of background about the company. He was formerly the owner of a smaller construction business. Two years prior, he had purchased another construction company, and then invited the president of a third company, Jim, to join him so that together, they formed the largest company in the industry in the Midwest.

As Max gave me more details about this very critical situation, I proposed that we meet with the other owner, Jim, as well as their new COO, Tom, to design a quick, impactful plan to get the back orders out and avoid the bank’s loan recall.

“Oh, no, I don’t want Tom in this. I’m still teaching Tom the ropes of the business, and I want to see how well he does before I give him more responsibility. And Jim and I aren’t, uh, talking to each other right now. He isn’t interested in this side of the business, anyway. He just stays out in his warehouse office and works on his invention.”

“His invention?”

“Listen,” Max shot back, “The co-owner doesn’t care about anything but sitting in his office down the street all day playing with some new product that is supposed to revolutionize the industry. I hate to admit it to you, but he hasn’t seen the financials for more than a year. I’ve been busy putting out other fires. It would be a little embarrassing for me to let him in on what’s happening right now.”

“You mean your co-owner doesn’t know the bank is threatening to recall the loan? That you have $40 Million in back orders you can’t fill?” I stammered.

Max just grinned sheepishly and stared at me.

At this point, dear Reader, you may be thinking this story is fabricated. After all, a real company cannot operate like this, can it? Yes, it can. I was there.

But it was due to fold – with problems obviously starting and ending at the very top.

“Max,” I said, “Before we do anything else, we have to let the co-owner and the COO in on the problem – you are going to need help and buy-in with the solution.”

“It’s all over, then,” he buried his face in his hands. “You don’t understand these guys – they don’t know how to run a business like I do. And they are difficult to deal with.”

I sat in stunned silence. Of course, you know that what was running through my mind was that Max didn’t know how to run a business either – and he was difficult to deal with, too.

How did the company come to this point? It starts and ends with leadership, doesn’t it? The health or lack of health in leadership is felt at every level of any enterprise. And there are several key factors that fell short in this particular case.

But I’ll talk about three important ones here:

1. Lack of clear roles and responsibilities.

Max and Jim had decided that Max would operate as CEO, but they didn’t know what this meant. And they never defined any responsibilities for either of them. Max fell into running the company because he liked being the boss. Jim busied himself with doing what he loved best – tinkering to invent a product that would put the company on the map. Max brought Tom in to fix the “employee problem,” but hadn’t allowed him to get near any employees, yet, except for a small satellite office at the other end of the state. Max said he “wanted to test Tom’s abilities, first.” This had been going on for months when I got there.

2. Lack of accountability.

As you can see from #1 above, none of the executive team was holding themselves or each other accountable. Max loved to sell and make deals, so this is what he was doing with investors – and yet, he wasn’t managing the directors and managers so that the company could run effectively.

Tom, the new COO, had tried to insert himself several times by proposing to oversee the management team, but Max shut him down each time, saying “You need to do what I’ve given you to do first so I can cut you loose.”

Max had, in fact, made the fatal mistake of assigning Tom to a small area of the company that had little to do with production and the problem at hand. And Max wasn’t investigating the real problem, either.

And then, there was Jim. Jim loved to tinker. Alone in his office all day. I still don’t know how he survived his original business before Max brought it on to combine it with his own.

3. Lack of communication.

How in the world did three men who held such high responsibilities find themselves in a place where no one knew what the others were doing – and the company was going down?

A multi-million dollar company with no one leading.

Why didn’t Max communicate? Max claimed that he couldn’t talk to Jim because the latter had a temper, so Max avoided keeping Jim up to date with financials, challenges, and other vital pieces of information. And Max claimed that Tom was too new to know what he was doing and so withheld information from him that could have helped Tom to help the company.

Why didn’t Jim communicate? He told me he thought Max was an arrogant idiot who was so hard-headed that it was impossible to talk with him. Jim said that Tom was a nice fellow, but he wasn’t sure he trusted him because Tom was always in Max’s office.

And Tom? Tom didn’t communicate with Max because he had asked too many questions too many times and been shut down to the point where he was silently contemplating quitting and moving his family back East. And he didn’t communicate with Jim, because Jim always had his door closed down at that warehouse office.

At every turn, there were unspoken conversations and unresolved conflict because people weren’t asking the hard questions, and providing tough information to each other.

Avoiding these critical conversations had resulted in one giant fiasco.

You can guess that the initial meeting with the four of us was not a gentle one. Tempers and voices flared, and it took some mediating to reach an agreement as to how to talk with each other and work through the problem so that we could get to the issues at hand. We finally reached consensus on what strategies to take, who would be responsible for what, and how to hold self and each other accountable through this critical process.

I frankly breathed a sigh of relief. Mediating and coaching conflict in such a situation are not easy, but we came out linking arms.

Sometime later, after leadership diverted the crisis, I would fire Max (yes, I have fired a couple of clients). I would have loved to stay on to help shift culture, and help the company excel. But Max was not willing to be transparent with Jim and Tom about some critical issues, and he wasn’t willing to work on his own leadership. He just kept blaming everyone and everything else. Shortly after I fired him, his board fired him as well.

I’m glad to say that Tom has taken over running the company, and has really turned things around. And Jim? He is still inventing things in his warehouse office that are bound to revolutionize the industry.

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Patti Cotton is a CEO and former foreign diplomat. A sixth generation business owner, Patti not only coaches leaders – she has extensive experience in actually being one. Her experience, record of unprecedented success, and extensive training and certifications make her uniquely qualified to bring value to you and your team in the areas of leading self, leading others, and leading the enterprise.

Patti’s areas of focus include leadership and talent development, with specialization in leadership behavior and communication, conflict management, executive presence, succession planning, and strategic personal, leadership, and organizational growth.

With over 25 years of proven leadership experience, Patti works with individuals, teams, and organizations across diverse industries. As an executive coach, trainer, and Fortune 500 speaker, she will inspire, influence, and impact your organizational leaders to reach new heights of success in their personal and professional growth, and to improve performance across your organization.

For more information on how Patti Cotton can help you and your organization, click here.