Thursday, 25 October 2012

Mediation And Family Business Consulting

Wednesday 23 May, 2001
Mediation can be defined as “a process in which a neutral facilitator assists two or more parties in reaching a mutually agreeable resolution to a conflict or dispute”.
Many business people are familiar with arbitration as a method of resolving disputes, but not mediation. In arbitration, issues are presented to a neutral third party who is empowered to make binding decisions on the issues. Mediation is far more adapted to the consulting process, where the consultant is assisting the family and managers to make their own decisions. In addition, the parties retain control of the outcome, which is often important in family businesses.

Mediation and Family Business

A wide range of issues can be mediated, including succession issues, conflicts between siblings and between generations, between non-family managers and family, dividing a business, and closing a business. Often there will be more than one consultant present, for example the mediator, the lawyer and an accountant, or a mediator and a family therapist, or a mediator and an insurance professional. If the other professionals also have mediation skills, this might reduce the need for a separate mediator.

The Mediation Process

There are seven stages to the mediation process. The process enhances the probability of success of the mediator in resolving the problem or dispute:
  • Separate meetings with each party

    The mediator meets separately in person if possible, or over the phone, to assess the issues and point of view of each party. This allows the party to vent and the mediator to get a clear idea of the differences and commonalities between the parties, and the desired outcomes of each party.
  • Setting the stage

    The mediator opens the joint meeting with all parties present by explaining the process and ground rules. Ground rules typically include a no-interruption rule and a requirement of courteous discussion. Other rules may be helpful, as determined in the separate discussions, such as seating arrangements, additional separate meetings with the parties, etc. The role the mediator as facilitator and not decider is emphasized, as is the neutrality of the mediator.
  • Opening discussions and information gathering

    Each person gets a chance to state the problem uninterrupted from his or her point of view, with the mediator summarizing and neutralizing. The mediator can also ask questions to clarify points and make sure all pertinent information is on the table. Often, the parties have not clearly heard each other up until this point. Sometimes this new understanding is enough to solve the problem.
  • Analyzing and framing issues

    The mediator sets out what the issues are, in a way that enhances possible resolution of them. This is the mediator’s key skill and contribution. Often there are commonalities the mediator can point out as well, and sometimes the mediator can point out that the parties already agree on some issues.
  • Options, negotiations and decision-making

    The mediator assists the parties in looking at a number of options for resolving issues, analyzing the feasibility of the options (often with help from other professionals), and negotiating a mutually agreeable outcome. Often it is key to assist one or more parties in saving face in order to reach agreement.
  • Finalizing agreement and writing a plan

    Once the parties have reached agreement, the mediator writes it up so that everyone can see it. A flip chart, overhead, or a large monitor can be used. Then the parties can confirm that this is the agreement they want. A formal written agreement may follow, through the mediator, the parties, or attorneys.
  • Follow-up meetings

    Sometimes it is helpful to schedule one of more follow-up meetings, to make sure that the agreement gets written, or that the technical wording is agreeable to everyone, or that the agreement is working.
Studies have shown that mediation is an effective cost-saving method of resolving problems and disputes. It can avoid expensive lawsuits, or settle them once filed. It can help families focus on resolutions rather than personalities. It is a method that is particularly applicable to family businesses and family business consulting.

This article has been partly extracted and modified from Zumeta, Z.D. (1995). Mediation and family business consulting. Proceedings of the 1995 Family Firm Institute Conference, October 11-14, St.Louis, MO, USA. 

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