Mediation in Family Business

Mediation is a non-interventional conflict resolution method, during which the mediator acts as an intermediate between the two parties guiding the conversation in a way that they find out a solution. A more “by the book” definition of the process, as given by Boulle, Goldblatt & Green is the following:

“Mediation is a decision-making process in which the parties are assisted by a third party, the mediator. The mediator attempts to improve the process of decision-making and to assist the parties to reach an outcome to which each of them can consent, without the mediator having a decision-making capability.”

Successful mediation is often related to the settlement. Sometimes a settlement is an option and we claim it. But it is not the goal of the mediation. This misunderstanding though led many people to believe that the “Success Rate” of the mediator is the number of cases/disputes he “managed” to compromise. This perception is false because:

Not every conflict can be solved through mediation.

There are times that it is better not to agree to something than agree. In reality though..

These are the four mediation approaches:

  • Settlement
  • Evaluative
  • Facilitative
  • Transformative

The mediator chooses the approach based on the case, logistics, experience, and personal style. We are going to go through every approach in detail in a separate article, dedicated only to Mediation.

We mediated in a case of a very dynamic start-up family business. All the members owned businesses, knew their job, and had expertise in their sector. They also had very strong arguments to support their opinions on the way the business should be run. We started with individual meetings followed by long-hour phone calls with each party analyzing issues and interests and then we proceeded to the actual meeting of the mediation.

But first a little insight about the family businesses, in Greece

  • 80% of Greek Business is family Business (Source: European Family Business).
  • 41% of Family business thinks to give the ownership to the next generation.
  • 25% is preparing the success. (Source: ,KPMG Greece Research Results).

In this particular case showed clearly that the members faced difficulties to:

1. Differentiate self-interest from the business interest.

Interest in the simplest of terms is: 

“Why do I want this to come to pass? What deeper need of mine is satisfied if this happens.” 

Personal interest is difficult to understand. It requires excavating! Even before we shit to the table we often lose ourselves to useless confrontational positions. It takes courage to confess our interest! Even to ourselves sometimes. Especially in an honor culture country like Greece!

Business interest, on the other hand, is simple. A business’s purpose is to make money. That simple. So in most cases, it is no business issue. It is a personal issue that we need to handle, that affects the business.

2. Distinguish family roles from business roles. 

We have seen this practice a lot. The members may have the expertise, the knowledge, and the experience but the family influence is superior. Especially in countries with strong family bonds, the fear of hurting their loved ones make them retreat. The old generation, who usually created the business possess the required leading abilities and can take the hard choices. Many times though it is stiff and inflexible, ignoring the new data and opportunities, while the new one has the academic expertise, little real-life experience, and strives for its rightful place.

In the end, parties merited each other through cooperation and mutual understanding. Undoubtedly! They shared important resources that each individual had which many times are lost in conflicts. Sitting at the table together though, protected, and sharing information and emotions helps each side to have a view of the other side’s perception and feelings. It is a critical kickstart to manage themselves, their relationship, and the situation, much more effectively now and in the future.

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