BuyerZone Q&A: Resolving disputes with business partners
November 10, 2008


Not every business deal ends with a firm handshake and the confidence that you made the right decision for your company. Sometimes, a problem can emerge that makes you second guess your decision. But these issues can often be worked out if the two parties agree to get together and talk it through.

We spoke with Stephen Frenkel, Director of Negotiation Programs for MWI, a Boston-based dispute resolution and effective negotiation consulting firm, to learn what companies can do to work out a dispute and preserve their working relationship.

BuyerZone: What problems typically develop when two companies disagree over aspects of a deal?

Stephen Frenkel: The three biggest problems that come up with a partner dispute are lack of accountability, miscommunication, and failure to follow through. Typically, these problems come about because the two sides make assumptions about points of the deal that they haven't fully discussed, such as failure to follow through on turnaround time, deliverability, challenges that arise (even with the best of intentions), or other important details.

These problems can typically be worked out if the parties successfully talk it over. A lot of times, both sides make positional demands without realizing that their core needs and concerns can be addressed in other creative ways. If they discuss the needs that underlie their initial demands, they can often find solutions that work for everyone without putting the parties at odds with each other.

In a B2B sales context, both sides will negotiate, and sometimes even fight, over price. They should realize there are other important elements of a deal, like time to market, customer service, fulfilling volume commitments, and setting payment terms. If the two sides would discuss the full scope of each others' needs, they'd be able to focus on the value of the deal that benefits both parties and often avoid conflict all together.

BZ: What mistakes do businesses tend to make when problems emerge?

SF: You typically see both sides of a deal making three mistakes when there's a dispute:

First, the two companies don't have a strategic approach for addressing the problem. They may not think about what's important and facts and information become disorganized and poorly structured before they talk. By the time they actually have their conversation, they work off the cuff and allow emotions to get in the way. This could be prevented by spending time preparing facts and documentation for a rational discussion.

Next, they don't have the right conversation with each other. It's important to address all the problems they have with one another, particularly the more challenging issues. There may be assumptions or expectations each had for the deal and they need to bring to the table to arrive at a mutually satisfactory agreement. Otherwise, it's difficult for both parties to get on the same page to resolve the dispute.

Finally, both parties fail to keep their emotions in check. When people are pushed, they tend to push back and that isn't going to resolve the problem. Again, it comes down to strategic planning and preparation. Rather than allowing emotions to dictate reactions, people should think about what their end goal is and take strategic actions to meet those goals. They'll find themselves a lot more capable of resolving disputes during intense situations.

BZ: What's the most effective way to get two parties to resolve a dispute?

SF: Start by asking a lot of questions. Don't assume you have all of the information because both sides will have thoughts about how a deal should go that the other isn't privy to. Recognize that both parties have a lot of information that the other would find useful. By getting answers to your questions up front, you can coordinate an outcome that both parties agree with.

Also, look at the big picture. Typical business deals are not one-time arrangements but rather a long-term partnership. In B2B, companies want to work with one company, achieve success, and repeat those results. Person-to-person contact is important in fostering that relationship and addressing needs that are important to everybody.

BZ: How can a mediation services company help two parties resolve a dispute?

SF: First, it's important to mention that mediators help parties to resolve problems for themselves. This is different than what a judge or arbitrator does, namely, make decisions for parties. In order to change how people approach a dispute, it's up to a mediation services company to facilitate a dialogue that helps the parties come to a mutual understanding.

Two important premises (out of five) that govern mediators are the principles of neutrality and self determination. Neutrality ensures that both sides will participate in a fair and unbiased process and that the mediator won't sway them to accept any one outcome. Self determination requires the parties to consider the information before them and come up with an appropriate solution. Doing it this way helps ensure whatever they agree to is a long-lasting, durable solution that benefits all parties.

Additionally, a mediation services company can provide facilitation, arbitration, negotiation training, or coaching depending on the complexity of the dispute and what both sides are trying to accomplish.

BZ: What other advice would you provide for two companies hoping to fairly resolve a dispute?

SF: If you plan to fix a problem without a mediator or other third party, remember to gather information to make your case and develop a plan to discuss the situation rationally. Burning bridges can have its consequences — work on conversation that can address the problem without causing damage to the relationship.

Also, do what you can to keep your long-term working relationship alive. This requires a commitment from both parties to create a balance and potentially work out future deals. Building a B2B partnership with another company is very difficult. You don't want one bad deal to damage that relationship and require you to both look for new partners.

If you find that you need help talking with the other side, then hiring an experienced mediator who can help you and the other side discuss your needs and generate creative options to solve the problem can be most helpful. Mediators have the experience and expertise to help guide the conversation and process, while enabling the parties to generate a solution that works for them.

Of course, it sometimes makes sense to amicably end the relationship completely. If you find you need to bend too much to preserve the relationship, it could lead to resentment and create bad feelings throughout your partnership. Making a clean break allows both parties to start anew with no ill will towards the other.

This article reprinted courtesy of BuyerZone. BuyerZone connects millions of active buyers to a comprehensive network of national and local suppliers across more than 150 product and service categories including Phone Systems, Copiers, Metal Buildings, Home Security Systems, and Forklifts.

Click here to return to the top of the page.

Click here to return to the article index.