US Army General, Creighton Abrams, is credited with the advice: “When eating an elephant take one bite at a time.” For many small-to-medium business owners, resolving disputes is like eating elephants. It can be so overwhelming at first that they would rather not try. The business advisor’s role can be to encourage business owners to tackle disputes that are impeding business. The advisor can also help separate the “elephants” into smaller more manageable or “bite-size” portions.
Businesses of all sizes experience disputes, however small businesses generally have fewer resources to deal with them. And, disputes in small businesses are often quite personal involving staff members who are not only colleagues but also family members or friends. Managing a dispute with an underperforming staff member can be difficult, when the staff member is a spouse or sibling it can be seemingly impossible.
Some Small Business Elephants
Small business disputes often involve staff performance, customer non-payment, financial supplier quality, and ownership and partnership issues. Small businesses may also find themselves in dispute with much larger, and better resourced, government agencies and financial institutions.
Many of these disputes could be avoided with better documentation. Small business owners are often so engaged in the day-to-day running of the business that they fail to have adequate employment contracts, policies and procedures, terms and conditions, and management processes, or else they fail to keep up with regulatory changes. These things often don’t seem important when things are going well.
In some instances, disputes benefit businesses by drawing attention to the inadequacy of their paperwork and spurring them into action to address this.
Bite Early and Often
The best advice that any advisor can give, in regard to disputes, is to follow an early engagement approach. Don’t wait until you receive another letter of demand or a visit from a government inspector or union delegate. Correct errors and address situations before they are allowed to escalate.
There is no doubt the elephant can be eaten, but you do need to take bites early and often.
Eating the Elephant
There are different mechanisms for devouring elephants or resolving disputes. Arbitration is seen by small business as being expensive and time consuming. However, there is little awareness among small businesses of mediation and formal mediation processes can also be time consuming.
Following a standard mediation process but in a less formal context can be effective in resolving disputes. The business advisor can act as a mediator, working with the client and the other party in the dispute to:
- Gain recognition of the problem (name the elephant)
- Identify the issues in neutral terms
- Assess the options
- Negotiate a strategy
- Implement the strategy
Resolving disputes can be like undertaking a number of small mediations, biting off and then chewing pieces of the elephant.
What Works for SME Dispute Resolution
In our experience, what works in small business dispute resolution is:
- Early engagement
- Keeping discussions directly between the parties with advisors, lawyers and accountants at arm’s length*
- Constructing a narrative around the issue
- Understanding the other party’s objectives
- Creating a knowledge asymmetry, ie making sure you have more and better information than the other party.
*If businesses want to involve their lawyers or accountants in disputes we suggest that the parties talk to their lawyers or accountants but then continue to talk to each other rather than having them speak directly to each other. Lawyers have a tendency to get bogged down in the semantics of the law and this can overtake the actual dispute.
Your Elephant is Important to Us
There are number of agencies available to support businesses, large and small, in resolving disputes including:
- Small Business Commissioners – Federal and state
- ATO Small Business helpline
- Fair Work Australia
- IP Australia
- Industry associations
The key to using these agencies effectively is asking the right questions. You need to have the issues clear in your mind, and also noted down, before you contact an advice line. You do not want to wind up eating the wrong elephant. To quote Einstein: “a problem well stated is a problem solved.”
Planning the Menu – Supporting Small Business Dispute Resolution
There is no doubt small businesses could be better supported in resolving disputes. There are steps that the businesses can take themselves and there are steps that the agencies that are there to help can take.
Small businesses can build mediation – as a dispute resolution option – into their contracts. And, small business agencies can enlist trained mediators with business skills and experience. These agencies could also educate the small business community about the features and benefits of mediation. Avoiding litigation and arbitration can save businesses time and money and provide resolution where both sides of the dispute can achieve closure.