Family Business Quarterly
The dispute at the family-owned company seems irreconcilable. The sister, who is marketing director, wants a higher salary and bigger title. The brother, who is president, feels the sister is getting too big an ego and is refusing her request. She threatens to sue and he threatens to resist.
Such disputes are perfect candidates for mediation, according to two experts who appeared at a recent Executive Breakfast sponsored by Northeastern University’s Center for Family Business. “What you are really looking for is a creative process to craft a solution tailored to the interests of both parties,” said Robin Sher, president of Robin Sher Associates, a firm that provides conflict management services. “That process is mediation.”
The key to making mediation work, she said, is to pair interests versus perspectives. Individuals come into a dispute with a definite perspective, based on their job title, place in the family, and past experience, she noted. What may be less clear to each of them is their own interests.
For example, the woman cited in the opening paragraph may have the perspective of requiring a higher salary and bigger title. But her real interests are in gaining recognition and authority, and in fostering company growth.
Similarly, the brother may have the perspective that his sister is getting out of line or asking for too much, but his interest may be in slowing company growth so that he has more time for his family and in fulfilling his role as a caretaker of the family business in his deceased father’s name.
According to Philip Rosenblatt, a director with Goulston & Storrs and an expert in mediation, a key challenge in family businesses is getting past emotional barriers. “Usually, there is a lot of emotion, so I try to speak to each party separately.”
In his conversations, Rosenblatt similarly seeks “to discover their real interests.” In the case of the brother and sister referred to in the opening of this article, he noted that they each own half the company and “have a tremendous synergy” of skills.
Then, he seeks out creative solutions. For the brother and sister, definition of roles might be appropriate, where the brother becomes chairman and spends more time on his favorite activities of research and development while the sister becomes chief executive and focuses on achieving faster growth. Outside professional managers could also be a useful influence, and buffer between the siblings.
Mediation Versus Arbitration
According to Rosenblatt, mediation is usually preferable to arbitration for family companies. Arbitration usually involves the arbitrator accepting one party’s position. If the brother and sister had opted for arbitration, the losing party likely would have harbored long-standing resentment that could have interfered with company success in the future, he said.
The best mediation process involves the parties being able to come to terms in their own way. According to Sher, “The power of a solution that one party throws out, and the other embraces, is much more powerful than any solution put out by a third party.”