“Unsticking The Stuck!” (How to Resolve Business Conflict)

Our clients, Tom and Edna, own a heating and air conditioning company started by Tom’s father 40 years ago. They have weathered their share of challenges, but overall, the company has been quite successful. Tom‘s vision is to develop the high end of the company and step away from the day to day activities. Eventually, he would like to pass the business on to their son, Jeff.

Tom believes that Jeff should learn how to be an entrepreneur by working outside the family business – at least for several years. Edna, however, strongly disagrees and wants Jeff to remain in the company.

Herein lies the rub. Over the years, Tom has been “flexible” with Edna’s strong and often abrasive personality. She has become more and more forceful, however, and it has created conflict… not only in the situation with Jeff, but also within the company in general. The pervasive spirit of conflict has kept the company from achieving higher levels of success, and poses a threat to the future of the business. Until and unless Tom finds an agreeable solution to Jeff’s entrepreneurial growth AND a way to deal with Edna’s “take no prisoners” style, planning for their ultimate exit and retirement is not on the “highly likely” list. What to do?

Wealth Legacy Group, Inc. has assisted Tom and Edna in managing their retirement assets for many years. One day as Tom and I were discussing the acquisition of life and disability insurance to fund their buy-sell agreement, Tom confidentially shared his frustration over the impasse between himself and Edna. He feared that if he didn’t come up with a strategy to deal with this conflict with Edna, he might not only lose his business partner, but also his life partner!

Tom’s challenge required the skill set of a specialist. I called friend and business coach, Rich Phillips, to help me address this roadblock. Rich has helped many business partners and families work through conflict.

In working with business owners, Rich uses a self-assessment tool that evaluates the management style of the owners and/or management team. Following up with an alignment process, he holds the business owners accountable for their success and maintains a bulldog like focus on their outcomes. The concept, I have learned from Rich, is based on Douglas McGregor’s XY Theory proposed in his 1960 book The Human Side of Enterprise. The XY Theory remains a valid principle from which to develop positive management style and techniques and continues to make sense in everyday business life.

Tom and Edna completed the assessment tool. It became clear that Tom is a “Y” style participative manager and Edna is a classic “X” style authoritarian manager, and a definite style conflict exists. Tom’s “Y” style of leadership believes people will “apply self-control and self-direction in the pursuit of organizational objectives, without the need for external control or the threat of punishment.” Edna’s “X” style, however, manages as if the average person “prefers to be directed … will avoid responsibility…is relatively unambitious and wants security above all else.”

By identifying these different management belief systems, Rich now had a place from which to coach Tom, Edna and their team on how to understand and navigate the challenges of the “X” or authoritarian management style. Tom’s hope was that, with Rich’s guidance, Edna would embrace the difference in styles and appreciate the benefits of the “Y” culture for both their business and their personal lives.

Rich was able to assure Tom and Edna that they really could adapt to a new management style that would ultimately work for both. By clearly defining the roles of the business management, Tom and Edna could develop a new relationship for the company culture and for themselves. Tom’s role would be to remain focused on the day-to-day management of the company for now. His “Y’ style is perfect for the culture he has been striving to develop and ultimately pass on to Jeff.  Edna’s strengths could be used to focus on the big picture and the organizational aims of the company. She would be responsible for watching over the reporting on results and activities, with minimal day-to-day interaction with employees.

Next, Rich identified areas being vacated by Edna’s changing role. She and Tom agreed to hire a ‘Y’ manager to fill the void and assist Tom in the future. Rich utilized a proprietary tool he calls the “4 Hour Hiring Process” to save time and increase the odds of employing the right person the first time out.  By using an initial ‘de-selective’ approach to finding the person, the search for candidates becomes more targeted.

A feature of this process is a group interview which leverages the interviewing time. The process takes the hiring away from what is often a subjective “coin toss” to a more objective approach. Rich says that it has a track record of 85% accuracy, and I was impressed with the greatly shortened time needed to find the “right person”. For me, who has over the years made many wrong choices in hiring, it definitely got my attention.

Their son Jeff’s leadership and administrative skills were also evaluated during this process. As a result, Edna realized, and ultimately agreed, that both Jeff and the company would benefit by his acquiring outside experience and education – another great outcome.

And finally, systems and accountability were put in place to make sure the changes were all working. Key performance indicators were selected, and the manner in which they would be measured was agreed upon. This helped calm Edna’s fears that the company would collapse. This fear, in part, had been driving her ‘X’ personality.

Rich spent the next 90 days coaching Tom and Edna. Without the downward “drag” of personal conflict and a new understanding of their personal management styles, they found their business financial goals were actually more easily attained, with a lot less stress and a lot more fun!

Tom and Edna have recaptured their lost energy and can now focus on their business succession and retirement planning, often a three to five year process. Thanks to Rich’s coaching, they are now on-track to “pass the baton” successfully to Jeff. There is substantial insurance in place to complete the ultimate transition. Cash values are growing in retirement and insurance programs to complete a generational transfer of ownership.

This case demonstrated to me the power of collaboration in achieving goals that benefit everyone. Tapping into the expertise and wisdom of Rich, the collective skills of the company attorney and CPA and our own team in constructing the succession plan, Tom and Edna now confidently embrace the future with a shared vision and enthusiasm. They expect to be more successful and are positively anticipating the legacy of Jeff in the business.

Confusion and conflict are a sure recipe for “stuckness” and inaction. By simply acknowledging that something was wrong and by confiding his frustration, Tom’s action led to clarity and resolution.  Tom and Edna’s willingness to address solutions led to positive breakthroughs and greater success in their business, their marriage and their legacy.

Imagine That™”!

Written by R. J. Kelly – August 2011