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Case study | The cost of avoiding conflict

June 24th, 2013

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The cost of avoiding conflict

Background: Fifteen years ago, Estelle founded a business in the creative industries. At the time she was clear that she wanted to exit the business in ten years and to structure it in a way that would give her the time she needed to bring up her young family.

So she gave a long-standing employee a significant stake in the business and a role that included responsibility for bringing in new business and helping to manage staff. The economy was strong at the time and it took a number of years before it became clear that this individual was not really engaged with the business, or doing the role that she originally intended. This left Estelle in the position of having to fill in all the gaps.

It soon became clear to her as well as the rest of the people working for the business that this was not a productive, equitable or sustainable situation.

Issue : In an ideal scenario, Estelle would have sat down with her co-director and addressed the issue right away. However, an inherent aversion to interpersonal conflict meant that she ignored the situation and avoided making any decisions – for years.

To make matters worse, when equity stake was originally agreed, it was not underpinned by a formal job structure or a regular process of performance management and review. This framework would have provided a means to address problems.

As the economy slowed, the situation came to a head. Says Estelle “I had to go into double overdrive with the recession and bring in more clients, whilst at the same time managing staff and bringing up two young children.”

She tried to circumvent the situation by offering a stake in the business to a talented and senior member of her team, but he declined. “He was quite frank about not wanting to inherit my problems and did not want to become an Associate whilst this other individual was still with the company.

Resolution: At first Estelle mused on whether it would be possible to set-up a separate business for her co-Director to run, but it became clear that the only real solution would be for them to part company.

It was an invitation to join an Academy group meeting that provided the final breakthrough. The morning topic, building a high performance team, resonated deeply. The speaker, an ex-SAS officer who had been involved in the Iranian hostage seige, explained how the incident was only resolved through the way in which MI5 were able to work together as a team.

Estelle now knew that her next decision would be when exactly the two of them would meet to resolve this. “My Academy Group colleagues were both unanimous and supportive that it was the right thing to do. Crucially, they helped me to understand that by doing nothing, I had been unconsciously giving out the signal that it was all fine. When he and I sat down to talk it all through, he was both surprised and shocked. It was clear that there had been a total break-down of communication between us both.”

The outcome was that the Estelle’s co-director was given compensation for his shares and allowed to keep his own client base. Her business then grew from strength to strength and had its best year ever after his departure.

“Needless to say I beat myself up about taking years to make this key decision. But on a positive note, it forced me to address my own underlying aversion to dealing with conflict situations. This learning curve and new awareness now means that at least 75% of the time, I get on with dealing with an interpersonal challenge right away.”

“Now my business is part of a bigger group and we can take advantage of the huge support mechanism that offers. This structure really works well for both me and the business. So it all worked out in the end.”

Contact Glenn Watkins  glenn.watkins@chiefexecutive.com to learn more.

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