Conflicts between partners, or "How not to kill your own company"

Conflicts between partners, or "How not to kill your own company"

How not to kill your own company because of conflicts between partners

The situation when a non-public company has two or more owners is very common. There is a direct link between business performance and personal relationships between partners. Let's take a look at a real-life example of how conflicts at the top level affect a company's profits, and consider ways to resolve this situation.
For example, a company has three owners with different views on business, two of whom are relatives. To avoid conflicts, everyone is responsible for a separate function. One manages and motivates the staff, the other is in charge of sales, and the third is in charge of strategy and business development. Although they all have the same goal - profit - the ways to achieve it are different for all three, and none of them wants to give in.

From time to time, alliances arise between partners: two against one. Other managers also copy this management style, which is why there are no changes in the company. Although the external environment in which the company operates is changing, the situation within the company does not allow it to respond quickly to challenges.

The company sells products from manufacturers to partner retail chains as a distributor, but like all supplier-distributors, it is convinced that it has no future and begins to develop its own retail network. However, distribution revenues contribute to the total income, and the question arises: whether to focus on developing your own network or to develop as a supplier without becoming a competitor for your customers - other retail chains.

Meanwhile, the company continues to have a conflict between the owners due to different views on the future of the business, which affects the culture of employees, who have made it a norm to avoid responsibility and look for the guilty. As a result, controversial issues are not raised and everything remains "as it is," but the necessary changes are not introduced. There are none, because at least the situation is not getting worse, as the company pays dividends to its owners.

How exactly do conflicts between owners destroy a company?

Mutual inconsistency between business partners means contradictions and postponement of work for top managers. At first, one owner said to expand the retail network quickly and the managers bought a lot of locations for stores that would not bring profit but would cause a loss to the company, and then the second owner said not to rush to develop the retail network, but to sell large quantities of goods in bulk with a low margin, because he thought it was more profitable.
These contradictions lead to chaos in assessing the company's performance, as it is unclear whether to evaluate it by the number of profitable stores or by the amount of net profit from wholesale sales. And since performance is evaluated once a month, managers are engaged in "improvements" that lead to savings and customer dissatisfaction, shortages of workers, and problems as a result.

How can a company solve this problem?

First, you need to clearly and deeply understand the problem that has arisen. Second, to develop a breakthrough solution. An example is the different views of owners on marketing. One may insist on opening new stores, believing that the income from them will pay off the costs, while the other may believe that the costs are too high. In this situation, it is worth putting aside the emotions that the disputes boil down to and understanding - asking the owner who is against high costs, based on what facts and arguments he or she believes. Perhaps behind the emotions lies an intuitive understanding that there is a problem.
To resolve the conflict, the three owners in our example need to understand what the conflicts are between them and clearly articulate and write down the dilemma that has arisen. For example, in our case, it is as follows:
The goal is a profitable business now and in the future.
The first need is to maintain the existing balance between the partners (to avoid conflicts).
The second need is to ensure business development.
The first action is not to change anything, because the system is somehow balanced.
The second step is to ensure that changes are made in line with market conditions.

Conflicts between owners lead to a lack of strategy and employee disillusionment. In our description of the problem, 90% of top managers recognize their company. When asked how to solve the problem, they offer partial solutions to the problem: to fire the organizer of the mess, to organize a team building activity. However, it makes no sense to improve parts of the system without solving the problem globally. After all, the problem is a conflict between the owners, not a top manager.
In this situation, the solution to the problem is to coordinate the position of the owners, create a common vision of the future and tactics to achieve it. The problem can be solved quickly if it is analyzed and comprehended in detail.