In the Harvard Business Review on Negotiation and Conflict Resolution, there is an interesting case study. Here is a summary.
A major supplier to a large business in the consumer sector had failed to deliver against some previously agreed service areas. The CEO of the business and MD of the supplier were spending much time, energy and effort discussing the situation. They were still doing business together in other areas, as the supplier was large and had been dealing with them for many years. It would take much time to source an alternative supplier. But, as you might imagine, relationships were strained. The CEO’s legal team had begun proceedings to press for compensation. Two years and $1.2 million later, the two organisations were still battling it out. A court date was pending.
The phone call
The CEO had recently attended a seminar on mediation and conflict resolution. He liked what he heard, particularly around the economic business case. A few weeks after his return to the office he did something that he was not supposed to do. He picked up the phone, called the MD of the supplier organisation and invited him for lunch. The MD was shocked. It had been over 18 months since they last spoke. All communication was now through legal documentation.
Lunch was arranged. The CEO booked a coaching session with one of the seminar facilitators to prepare. He then called his lawyer just as he was leaving the office, to notify him that the rendezvous was about to take place.
Over a two hour lunch session, the two men talked openly and with frankness about the case.
Enough ground and good will was forthcoming for the MD to welcome the CEO’s idea of engaging a mediator to help them iron out the detail. The MD was delighted because he was in dialogue again with his customer and the businesses would continue to work together. The CEO returned and briefed his legal team on progress. The later arranged mediation was successful.
It sounds so simple I hear you say. At boardroom level though, a conversation can be worth millions, even billions of pounds. This can be critical, particularly in the current economic environment. Perhaps this topic isn’t soft and fluffy after all. You might recall that one of the predictions I made at the start of the year was about increasing cases of class action. Shareholders and other stakeholders are increasingly holding organisations accountable for how resources are distributed. I won’t list current examples. No doubt names come to your mind as you read…
But beware. Simply going off and having conversations could do more harm than good. Providing training, facilitation and coaching for members of the board on the principles of mediation and difficult conversations is a pre requisite. The return on investment could be substantial. I’ll probably be sticking with the boardroom theme over the next couple of weeks.