By Alistair Dobbie 

In the world of finance we can all too easily skip over the very real costs of conflict. Emotional intelligence as a concept has done a lot to address the image of phone-throwing Wall Street traders left over from the days of Liar's Poker, but do we really know how to manage people to best effect when the going gets tough?

Valuing intangible assets or costs has made many a smart man rich, and failing to value these has sent just as many companies and entrepreneurs into downward spirals, flatspinning into a world where conflict overshadows value and reputations are easily lost.

This article looks to educate the reader on several important and relevant aspects of the discrete and sometimes secretive world of conflict resolution, which tends to be somewhat media shy, due to the
sensitive nature of some of the disputes and issues that are dealt with and disposed of in this line of work.

Some of the world's top firms are investing heavily in training their staff, especially at management and board level, to handle conflict smoothly, whether in negotiations, internal communications or full-blown disputes. Why do these firms choose to shore up skills in their human resources, even when the weather appears clear and dry?

The main reason is to be there ahead of time. Sun Tzu's adage, 'win the battle before it is begun' applies equally to those whose battle is to create a peaceful and effective work environment where all can prosper. Looking ahead and managing conflict before it happens can make the difference between a quiet chat in the corridor and a full-blown legal dispute. Best to be there ahead of the storm.

More of Sun Tzu's advice can be taken when it comes to best practice and intuitive technique. 'Know yourself and know your enemy, and you are assured of victory'. In conflict resolution, we go further, and advise that self-knowledge and the cultivation of genuine curiosity about your counter-party leads not only to victory, but effective value-creating relationships and fair and agreed methods of distributing this value.

Given the current boom in cross-cultural investment, such 'other-knowledge' is becoming an essential business asset. Many western firms with offices in China are only hiring staff who can read and write fluent Mandarin, but there's a deeper challenge here. Expectations about negotiation styles or modes of communication change when you cross borders, or even industries. What's fair game or good practice in law or banking may be rude or domineering in fashion or design. Where an American looks first to the contract and then to the relationship to settle a dispute, a Chinese executive may look to the underlying sense of community or 'guanxi' to clarify obligations.

The game gets more complicated when you become involved with the very real but mostly hidden personalities and histories of the people you are dealing with, be they across the negotiating table from you or working side by side in your own team. Many people are, for better or worse, unable to check their baggage at the door and this baggage can trip you up at crucial times. Personal histories like growing up in an abusive family or working in a stressful environment can trigger memories, conscious or otherwise, at crucial business engagements.

Behaviour can become confusing and erratic to the other party, because they are often unaware of these histories. Learning to deal with unexpected so-called 'hot buttons' has been the premise of great diplomats and political leaders, but it is a skill that manyboardroom executives are clamouring for as they seek a better way of dealing with the unanticipated effects of tough negotiation.

Such skills are becoming increasingly sought after by companies who also want to brand themselves as part of the new wave of ethical and environmentally friendly businesses. What was a business luxury ten years ago is becoming ever more important as media awareness and peer-to-peer information flows put the spotlight on corporate practice. Being curious about and sensitive to the impact of your decisions and communication allows you to manage crises and conflicts of opinion in a collaborative and effective way. With the right leader in place, one who listens to feedback and manages dialogue with stakeholders (even those outside the standard institutional chain), what would under more clumsy hands have been an ugly and damaging demonstration can be incorporated into a well-managed, productive and constructive dialogue with a potentially valuable source of information about the way the company is viewed by the outside world.

In an environment where company information comes at the cost of high consultancy fees and expensive market research reports, to learn to involve your executives in the flow of freely available feedback andinformation turns muck into brass. The world where the noise outside the boardroom was something to be silenced at all costs is fast becoming a world where good executives can channel that information into something that fuels the next PR campaign, whether for reducing carbon emissions, outlining the reasons behind a controversial decision or targeting your own people, whose views count as much as any other.

In short, the new breed of executives at some of the world's top firms is looking to add conflict literacy to their range of attributes. Turning a sticky situation into a win-win is not any longer the theme of everyday pub stories, but simply put, good business. Whether it is sub-prime mortgage valuations or Enron's accounts, the history of corporate finance is littered by examples of when real issues were not raised, and not managed correctly. People in the know didn't get the chance to voice their concerns at a time when something could have been done about it, and in the end, a heavy price was paid. If the skills had been in place to know how to listen to a potential 'whistleblower' or how to voice a concern without rocking the boat, both these crises may have been managed in a way that mitigated the impact of bad decision making.

There is a positive side to conflict resolution training, too. What one learns, from good training or bitter experience, is to think ahead and communicate correctly and effectively, right from the get go. 'Maybe's are turned into 'yes' or 'no'. Unclear phrases are explained and explored. Commitments are asked for and given, or refused, so that everybody leaves a meeting on the same page. A famous game played amongst trial lawyers is the one where each lawyer has to guess the numerical probability of success assigned to phrases common to the industry, like 'fair chance of winning' and 'good shot at a successful defence'. These are real phrases which influence top level decisions in settlements than can reach into the tens of millions, and yet so fewlawyers, when put to the test, can place a figure on what they mean, even though in risk management terms, the variance can be huge. Experts make a fortune estimating trial success and costs and gambling on whether going to trial is worth the risk of loss and investment in fees. When we get better at communicating to manage conflict, we tend to track down such variable phrases and turn them into concrete estimates of success or failure. This goes as much for any business venture, as well as law.

The final benefit to the art of conflict resolution is an increased awareness of what relationship and commitment really mean. The words are bandied around high-value industries in order to give a sense of longevity, care and trust, especially where large amounts of money or risk are involved. But how much they mean to each individual is very dependent on where they stand and how much time they have dedicatedto exploring the expectations that others have around these terms. In the conflict resolution industry, we tend to take a firm look at the way each person, group, corporate, industry or country understands, senses and feels relationship and commitment. Transferring this almost anthropological expertise to clients is what we specialize in, and it can be of tremendous help to those whose primary concern and focus is not how they are perceived by those around them, but their product, service or initiative itself.

Alastair Dobbie is an affiliate of Common Outlook based in London

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