The Art of Conflict Resolution in Business Partnerships

Did you know that up to 70% of business partnerships fail due to unresolved conflicts? Mastering conflict resolution isn't just a skill—it's a necessity for any successful partnership.

Conflicts are inevitable and common in any business, however, in partnerships, each member has a personal stake and agenda, which magnifies the issue.

In this post, I will dive deep into the anatomy of conflict and provide some strategies to handle conflicts productively. We will review the three pillars of conflict resolution in small business partnerships and how they are interconnected.

Before we can discuss techniques for conflict resolution, let's better understand three aspects of conflicts: What are the conflicts about, how do we resolve them, and why do we have them to begin with.

Conflict deep dive

What are the conflicts about

While conflicts could be on any topic, really, let's review the major reasons and those that affect our business and our team the most:

What is best for the business - One of the arguments I hear about the most is the strong belief that each partner is convinced that his idea is the best idea for the benefit of the business. While all business partners claim that the business is at the top of their concern, they come up with why one way is better than another or why an idea could actually harm the business.

Resource allocation - Time and money are the most important resources of any business, particularly small businesses, where resources are limited. Decisions about time and money, for example - what should the team be concentrating on, should we hire additional employees, should we invest in a new venture or grow the existing market.

Financial matters - When partners need to decide if money will be distributed or invested into the business, personal financial constraints could come in the way. Different needs or future exit plans of each partner could create conflicting interests among partners.

Roles and responsibilities - We all have our perspectives on how things should be done, but with a lack of clarity on who does what, and what the responsibility and degree of freedom are when making decisions, conflicts could arise. Arguments about how a process should be done or who is responsible for a particular event can raise tension and cause conflicts.

Little things - Many times our different views and lack of clarity can trigger arguments over little things that can easily escalate into a bigger conflict. The wording on a website, the venue of a party, the design of a business card, and so on. While these may seem unrelated, as we will discuss later, there is a common thread and reasons behind those disagreements.

How do we handle conflicts

There are many ways to resolve conflicts. In many cases, we adopt a way that can get us by, or better yet, make us grow. A dialogue with a vote, getting a third-party expert involved, conducting research, or deciding that if not all agree, the status quo will not change. Some partners just compromise for the sake of peace in the company, but those tactics may build long-term resentment and will cause the partner to lose interest and buy-in in the partnership.

But what happens when an issue cannot be resolved in a constructive manner?

Anger - After trying to get our point across without much success, we can get frustrated and start feeling anger. When we get to that level, we lose our ability to make the right decision. We will use our power and circle of influence to enforce our opinion: "You know what - if you do this, then I will do that," or "This is my domain, and you are not going to tell me what to do. Stop me!"

When those situations are getting more frequent, the anger is triggered earlier and more frequently. We lose our patience and desire to cooperate.

Apathy - As previously noted, some partners choose to remain silent and avoid arguing altogether. They feel unheard, leading them to question the point of speaking up. This results in decreased energy and a complete lack of motivation to support the success of the new decision or the business as a whole.

Keeping things to yourself - If a partner feels like nobody's listening, they might just stop bothering to speak up. They'll go ahead with what they think is best and handle any fallout if someone complains. This approach can quickly lead to a lack of trust and being left out of conversations that happen without them.

Why do we have conflicts

After discussing what the conflicts are about and how we handle them, let's try to better understand the root cause behind those conflicts.

Personal Core Values - We all have core values we have developed during our lives. Before we talk about this topic let me explain something important: Many people mistake their own core values for values that they admire in others or deem important. Core values are not what we 'wanna be'. Our core values are those we live by every single day, and whenever a core value is being violated, we get upset. An example of a core value conflict would be freedom of choice vs. comfort of structure.

Personality type - A different aspect of the same topic would be our personality type. While there is a strong correlation between our personality and our values, it is sometimes easier to look at behavior patterns (personality type) rather than the root causes that drive them (our values). Examples of conflicting personality types could include: intuition-driven vs. fact-driven, empathy vs. strict justice, risk-taking vs. conservative approach, and so on.

Energy levels - Our energy goes up and down throughout the day and affects the way we perceive the world around us and the way we react to it. Our energy level strongly affects our ability to create win-win decisions and embrace opportunities.

When we resonate at a low energy level (Level 1 - The Victim, Level 2 - Anger, and Level 3 - Coping), we should avoid making critical decisions that impact the future of our business.

Energy levels, as defined by the 'Energy Leadership' methodology, are divided into seven distinct layers of energy and can be assessed using a science-backed assessment called ELI - Energy Level Index (more information about the assessment and how to take it can be found on our website).

Resolving Conflicts

The three pillars

Handling conflicts in general is a skill you can learn and practice by itself. But in a business partnership setting, there are other aspects that together can significantly reduce the conflicts and provide mutually agreed-upon guidelines to resolve them.

The pillars are:

• Communication skills

• Leadership Alignment

• Strategic Growth

Let's review them one by one:

Communication skills:

There are many resources on the internet about this topic, including

• Negotiating Skills

• Active listening

• Empathy

I will not address in this post the classic techniques of communication, as those are freely available and easy to find. Instead, I would like to review communication from an energetic lens, based on the seven energy level model of 'Energy Leadership.

When we are in the lowest energy level - the victim - we demonstrate apathy, keep our ideas to ourselves, and lose motivation or ambition to participate. At level 2, we tend to ignore any other opinion and use whatever is in our power to force our way. Those catabolic levels are unhealthy in any business discussion.

At level 3 - coping, we will cooperate and do what we have to do to make things work, but we lack motivation and buy-in to initiate, create, and grow.

When we elevate our energy to level 4 (empathy), 5 (synergy) or higher, we are seeking a win-win situation, we judge less, and have the patience and empathy to listen and innovate new ideas for the benefit of all parties involved. There are methods to identify your current energy level and the level of those around you, and specific techniques to elevate the energy level of your team (more on that topic in this blog and our website).

Leadership Alignment:

Many of the conflicts can be eliminated when the leadership is aligned around the company's core values, goals, roles and responsibilities, and processes to perform certain tasks in the business. Core values and goals serve as a guideline in the decision-making process. Every decision is measured against its alignment with the company's values and evaluated in how close it gets us to our goal.

With those tools in hand, the discussions are deviated from our own personal values and perspectives to mutually agreed principles. The process of identifying and establishing business core values is extremely important, even in smaller companies (even in a sole proprietorship business). Based on those values, we can establish our processes and set our goals.

Strategic Growth:

As the next step, derived from our values and goals, the company needs to establish a shared vision. This is the north star that guides the company to the final destination. When the direction is clear, future investments, resource allocation, and other decisions that affect the company's future are much more straightforward.

In addition to the company vision, other growth and future aspects should be addressed, such as exit strategy, scaling, opportunity adoption, and more.

Summary

When combining a highly engaged team with mutual values, aligned goals, and a common vision, you will gain not only the ability to resolve conflicts better but eliminate most of them altogether. Elevate your team's energy, and devote time to strategic discussions about leadership and growth, and you are on the path to success.