by Beth Azar
Volume 29, Number 4
A multidisciplinary practice of psychologists, business consultants, lawyers and financial experts resolves business conflicts.
Growing up in a family construction business in Wisconsin, David Gage, Ph.D., was keenly aware of the tensions that can arise between business partners, especially those who are also related. His mother’s father started the company and eventually brought in his four sons. Gage’s father joined too but always remained the “outsider” son-in-law. There were often conflicts over business matters.
Those dynamics prompted him to pursue clinical psychology, with an expectation that he would become a family counselor, able to smooth over family strife. Then, several years before completing his Ph.D., he watched his wife and her partners in a travel agency battle through two disputes that nearly tore apart their business. “I realized then how much interpersonal relationship drive many business conflicts,” he says.
From that insight, he started a practice that would focus on mediating conflicts between business partners, with an emphasis on family businesses. He also decided that the firm should be multidisciplinary–combining the clinical psychologist’s counseling skills with the skills of lawyers, financial consultants and business experts.
Over the past eight years, his company, BMC Associates (BMC) of Washington, D.C. has grown to include Gage’s partner, finance expert John May, and 12 associates.
Typically, business partners approach BMC with a specific disagreement: One partner in a construction business wants to bring on his son and the other partner is opposed to nepotism; or a father and son can’t agree on how to expand their business.
BMC associates resolve some cases in as little as a day, while other, more complicated cases can take months. But overall, the process is less antagonistic and less costly to a company than litigation, which is where many of the cases BMC works on are headed, says Gage.
When each new client comes in, Gage evaluates the case and puts together a two-person team of one psychologist and one business or legal expert. These co-mediators work closely together, blending their talents to provide business savvy along with help on interpersonal conflicts.
“The combination [of skills] is very powerful, making the client feel comfortable and making the results and solutions almost always faster,” says May, who is also the executive director of Private Investors Network, based in Vienna, Va.
The co-mediators always meet first with all parties involved in a dispute, having them each tell their own side. Then they meet with each partner individually, talking more directly about business and interpersonal issues so at later meetings, they can tactfully bring up issues a partner may have raised in private. The goal is to help the business partners work out their own solutions and create a written agreement that restructures the relationship, the business or both.
Interpersonal problems were at the heart of a bitter dispute between two partners of an electronic database development company that recently sought out BMC’s help. The partners have polar opposite personalities–one is domineering, the other more passive–and constantly clashed over how to run the company.
So having a psychologist invovled in the mediation, along with someone who could work out a logistical business solution, was critical to the process, says one of the partners who asked to be identified only as John. Gage and BMC associate and business consultant Edward Kopf worked with the partners and several key employees for eight weeks. In the end, the partners agreed to a total restructuring of their business including bringing on a CEO to run interference between the partners.
“Having two mediators made a dialogue more possible and the dynamics more manageable,” says John. “And they saw issues from different perspectives so they could bring more of a find-tuned approach to the problem we were dealing with.”
Psychologists can often uncover hidden issues at the heart of what clients say is a purely business-related problem. In particular, it’s common in family businesses to discover long-standing misunderstandings, says Gage.
His first case, for example, involved a father and son at odds over who was in control of a distribution business they shared. The father had been part of his family’s long-standing business for more than 40 years and resented the way older members of his family subordinated younger members who worked for them. So, when he and his son established their own company, he made them 50-50 partners, and insisted his son be president.
Two years later, the business had grown to be worth $15 million, based largely on the father’s experience. But the son was taking his role as president at face value, and making decisions that his father completely disagreed with.
“The father was ready to throw him out of the business, while the son thought he had every right to dictate to his vice-president father,” says Gage.
Gage and one of his business consultant associates were able to ferret out the misunderstanding and help the father and son redefine their roles and expectations.
Expanding the practice
Recently Gage and his colleagues have begun to do conflict prevention with clients just forming a partnership or making changes to an existing partnership. They help partners develop a “partnership charter,” which details expectations and provides a framework for the organization.
During prevention session, the co-mediators engage clients in “scenario planning” where they think about potentially contentious issues. For example, “What if one of us loses interest in the business four years from now?” or “what if one of us wants to bring in another partner and the other doesn’t?” They also help partners explore their values and personal styles and how they interact.
“Creating a charter is both a process and a tangible product,” says BMC associate and organizational development expert Richard Yocum. “Working on the document helps business partners to commit to be patient with the process.”
For the mediation to work well, co-mediators need to blend their skills, not simply combine them, says BMC associate and psychologist Roger Friedman, Ph.D.
“Our goal is to provide a unique blend of psychology techniques and business acumen,” he says. “I think of it more as transdisciplinary than multidisciplinary.”
During sessions, there’s no clear line between the issues each mediator handles, says Gage. The psychologist may be the primary facilitator when emotions run high and the business expert may step in to help negotiate specific business or finance issues, but each mediator is actively involved in the discussions at all times.
To help associates work better together, once a month, the whole group meets to brainstorm cases and team-build. Often, associate will give brief talks on their profession so that other members can become well versed in what their colleagues do.
“That way we are all conversant enough to stay active in each part of the mediation process,” says Gage.