≡ Menu

Basic Conflict Resolution Skills: Business Partnership Conflict – PART II: 5 Steps to Resolving Business Partnership Conflict

The five steps to resolving business conflict partnership are: (1) Evaluation—Self-Assessment, (2) Identifying the Problem, (3) Re-establishing Communication, (4) Re-establishing Trust, and (5) Measuring Progress.

STEP 1: Evaluation—Self-Assessment

The first step is to assess where you are in the conflict. To begin, you will need to start by identifying and managing your anger and/or anxiety about the conflict. It is essential to address your emotional state first. If you skip over this portion of the process, you may be unable to move on to the other steps, and you may not be able to effectively resolve the conflict. One of the most effective means for addressing anger and anxiety  is to use breathing techniques.

Simple Breath

A highly effective and simple technique involves what I call the “Simple Breath”. One repetition is the following:

1)    Breathe in deeply through your nose for 6 seconds

2)   Hold for 3 seconds

3)   Exhale the air out of your mouth for 6 seconds.

One set is 4 reps. If you are feeling moderate anger, try doing at least 2 sets. If you are feeling strong anger try doing 4 sets.

Gather Information

Once you have been able to identify and manage your anger and anxiety related to the conflict, you can begin to gather the information necessary to resolve it.

  1. First, identify what happened and gather corresponding paperwork. For instance, if you suspect that your business partner purchsed personal items using a business credit card and was thus stealing the company’s funds,  make sure you have a copy of the credit card statement.
  2. Second, ask yourself, is this true?  In this example, could it be true that what really happened was that the partner needed to charge the card to expedite a bona fide business meeting? Or that the charge was in error?

Identify Choices

Generally, we have three choices when it comes to dealing with a conflict. We can either: (1) leave or exit the situation, (2) stay/adapt/cope/manage the conflict or change the influence of conflict or, (3) do nothing.


Exiting the business partnership requires the consultation of an attorney. If you are acting alone to protect your interests, you will need to consult with an attorney. Nevertheless, exercising conflict resolution skills can potentially help you navigate the process towards exit with less damage to both parties.

Stay/Adapt/Cope/Manage or Change the Influence of Conflict

It may be in your and the business’ best interests to try to work out the conflict. Conflict coaching can be helpful for managing the inevitable conflict of running a business. You should be aware that depending on the circumstances of your conflict, you may need to seek the advice of an attorney and retain your own private counsel to protect your interests and decide on the best course of action for resolving your business conflict.

There are many opportunities to resolve conflict that do not require an attorney, but that decision depends on your unique circumstances. If you do choose to seek the advice of an attorney, do not hesitate to be selective when you make your choice of whom to hire.. Some lawyers may be eager to retain clients in conflict to ‘go along for the ride’ and exit as soon as the money dries up.

Do select an attorney whom you trust, and who is committed to doing what is right for you, your family, and the business. Perform your due diligence, seek competent counsel, do an inventory of the facts and your situation, educate yourself on the issues, compare more than one attorney’s opinion, and then decide.

Remember, as the client, you have the power to make the final decisions. A respectful attorney is not supposed to make you feel “dumb”, “uncomfortable” or “unimportant”. Your attorney should be a trusted member of your team.

If the attorney does not believe the conflict rises to the level of a legal issue, implementing conflict resolution skills can be highly effective in terms of results and cost. If you strongly suspect or have evidence of criminal misconduct, such as embezzlement, seek the advice of an attorney.

Do Nothing

Doing nothing may very well be why you are in conflict in the first place. Neglecting conflict is dangerous because it can jeopardize the success of your business on a very fundamental level. Doing nothing rarely addresses the problem and typically exacerbates it.

Unattended conflict can grow and fester silently like a cancer that eventually kills the patient or reaches a point where no conflict resolution specialist can help. If a married couple has already filed for divorce and is waiting on the courthouse steps, it is unlikely that a marriage counselor can help rekindle the marriage. Similarly, business conflicts require intervention to prevent irrevocable harm.

STEP 2: Identify the Problem

We cannot change the past, but have control over how we respond to the present and how we might influence the future.

The Tip of the Ice Berg

When it comes to conflict, identifying a particular problem is like viewing the portion of an iceberg that is visible above water. Hidden from view  is the bulk of the obstacle that presents a much bigger issue. Your job is to go beyond the tip of the iceberg (the particular problem) and dive deeper to identify the mass below (the REAL issue). It helps to view this as your partner’s NEED that lies behind the problem.

To identify this, you can ask yourself the following: “Where is the problem really stemming from?” A seemingly innocuous disagreement between partners about where to put an advertising banner on a website could really be about the underlying anxiety one of the partners is feeling about something entirely different.

For instance, here is a potential flow chart of feelings:

Tony is upset that the banner placement on the website is not in the most prominent spot à perceived lower profit earned from the website à not enough income à endangerment of child’s school tuition à feeling like a failure as a parent/spouse.

Tony needs to know that the business decision about where to place the banner will not affect his child’s education or well-being; is there another way to address and meet his need to provide for his child’s welfare?

Focus your discussions on creatively addressing the needs that emerge.

This work takes great patience, skill, and practice, but it can be done and with more practice you will get better at it. Over time, you will observe that it can take much less time to identify the needs behind the problem and formulate solutions to meet that need.

STEP 3: Re-Establish Communication

In order to get to the place of identifying the underlying cause of problems, communication is critical. Excellent communication requires listening and expression skills.


Skilled mediators practice what is called “active listening”. This means that they focus on what is being said and comprehend the words they have just heard. If you truly listen to your business partner, you are committing to truly understanding his perspective and how he feels.

Try to resist the temptation to mind-read and try to set aside the many ‘filters’ and reactions that get triggered when you hear something.

(1) actively listen by focusing, and being absolutely present, on what your partner is saying.

(2) repeat back what you heard, asking to confirm if you heard the message clearly and correctly.

Expression Skills

Expressing your needs clearly and precisely necessitates (1) awareness, (2) authentic disclosure, and (3) congruent body language. Expression happens across four different planes: observation, thoughts, feelings, and needs or wants. (McKay, 1983)

The first plane is observations, which are factual:

  • “I paid the phone bill today.” (Fact)
  • “You were not at soccer practice on Thursday.” (Fact)
  • “This month the company grossed twice as much as last month.” (Fact)

The second plane are thoughts, which generally arrive at a conclusion such as opinions, theories, value judgments, or beliefs:

  • John Adams is a great miniseries.” (Opinion)
  • “My business partner must be cheating me because he hasn’t returned my calls or emails in weeks.” (Theory)
  • “Justin was smart for taking that offer.” (Value judgment)
  • “Profit increases of at least 15% per quarter are necessary for the business to be successful.” (Belief)

The third plane is expression, or feelings, which is the next step once you determine what you are feeling. This can be very difficult when adrenaline is coursing through your system and stress pheromones saturate the room. You can do some breathing exercises such as the Simple Breath and you can try excusing yourself from the immediate situation, such as stepping outside for some fresh air and perspective.

If you are experiencing difficulty even discerning what you are feeling, try discussing feelings about past events and eventually work up to expressing feelings as they emerge.

Here are some examples:

  • “I felt extremely relieved when you started going to Spender’s Anonymous last year.” (A feeling from the past)
  • “I feel anxious right now about this meeting because I’m afraid you won’t be supportive of my vision for the company.” (A feeling from the present)

Body language is critical in the communication process because people tend to gut check and make decisions based on what they feel, not what they hear. Your body language needs to be congruent with your expression.

For instance, if you are gritting your teeth and clenching your fist, holding in rage, and using a great deal of sarcasm (a form of anger) your partner will not only sense it, but will base their decision on the gut check they are feeling. It is unlikely that anything you try to say to your partner will register because your partner’s gut is registering and processing anger.

Express Your Needs

The fourth plane is expressing your needs or wants. The economic climate of the last several years has demanded that businesses and those who work at them to work collaboratively. The notion of “I’m getting my needs met, and I don’t care about yours” does not work in a highly competitive world where clients demand more value, businesses operate leaner, resources are scarcer, and where sustainability is critical to long-term survival and prosperity.

NASA conducted a fascinating experiment on the issue of collaboration. A pool of scientists was divided into three groups. One group had to individually come up with solutions to a hypothetical life-threatening space mission problem, another group had to work collaboratively, and another group was the control group.

What NASA discovered was that those who worked individually did not survive the hypothetical space mission based on the number of mathematically possible solutions. However, those who worked collaboratively survived by yielding a higher number of solutions to the problem which was necessary to survive the simulation.

Collaboration is critical to a company’s long-term survival and prosperity. The key to effective collaboration is excellent communication skills. Clearly and respectfully expressing your needs will not only help the bottom line, but can directly contribute to your happiness at work.

Try clearly expressing your needs instead of announcing or demanding them. This means avoiding blame or finding fault, and describing what would please or help you and requesting specifically what you need. For instance, announcing looks like this: “Give me more equity because you suck at running this company. You always sabotage leads, which means I can’t pay my bills”.

Whereas describing what would help you could look more like this: “In fairness, I need more equity to make this worth my time. This is because the salary I am receiving now is not enough to cover basic living expenses for this city; that includes rent, food, and utilities of X dollars. Currently, we don’t have enough leads to justify my salary, so could we find a way for me to take a larger equity stake instead?”

STEP 4: Re-Establish Trust

Acts of Transparency

Consider what specific actions or circumstances/results it would take to make you trust your partner again. Can you picture what that would look like? For instance, perhaps mutual access to view the books or have a mutually agreed upon CPA/bookkeeper may help to address matters of fiscal mistrust. Saying for instance, “I just need to trust him again”, is not concrete enough.

Reach Out

Once you have determined what actions could be done to restore that trust, reach out to your partner. Try to schedule a time to discuss the matter calmly during a time that is not particularly busy (e.g., a busy restaurant owner may choose to have the discussion on a Sunday morning).

If your partner is avoiding you altogether without returning any of your calls or emails, you will likely need to seek independent counsel or a neutral third party to break the impasse. However, involving an attorney can give the air of aggression and may not be the best choice to promote cooperation.

Nevertheless, a partner who is truly acting alone in his own self-interest can trigger serious legal consequences (see for instance California Corporations Code Sec. 16301(1)-16310).

If you believe, or are unsure, that your partner is acting in his or her own self-interest, and not in the interest of the business, consult with an attorney about your case’s specific facts in your particular jurisdiction.

Perhaps Why People Lie, Cheat, and Steal

The knee-jerk reaction most people have when we hear or know of someone who lies, cheats, or steals is that that person is patently “bad”. Judgment and consequent labeling is important in helping us, and our peers, to steer clear of those who could harm and exploit us.

When examining the conflict in a business partnership, it is critical to go deeper than the event and to look beyond judgment. However, this does not mean we ignore our ethical compass.

Lying, cheating, and stealing can often be traced back to an unmet need coupled with the fear and inability of communicating that need (for instance, stereotypical gender roles  that are deeply ingrained [e.g., “boys don’t cry” which is translated into “men don’t express emotion or their needs”]).

For instance, an embezzler’s crime could be traced back to his need to feel loved by his girlfriend, and the fact that he would receive that love in response to presenting the girlfriend with lavish gifts. The embezzler’s need is to feel loved, but perhaps the embezzler was afraid of asking for a raise, or of working differently to earn such a raise, so he altered the books.

Perhaps such a crime could be traced back to the fear that he would not get his most urgent need met: sex, love, or feeling important. This does not excuse the crime, though it could explain why he committed it and how it could provide a solution that stops such destructive behavior in the future.

The Emotional Stigma for Men

Many men have been trained from a tender age not to express emotion. There is also stigma in seeking “help”; that somehow as a CEO or manager, by seeking help they are signaling that they have “failed”. A more productive view is recognizing the learning opportunity to elevate their game.

Many enlightened business leaders appreciate the opportunities before them, but many more still are afraid to venture into the uncharted and “dangerous” territory of emotion and conflict resolution/management. Or, they are afraid of expressing those needs in a non-violent manner.

If reading this makes you uncomfortable, you may want to consider that expressing and communicating your needs in a healthy way is a potential challenge for you.

The River of Business

Such stigmas run very deep, are extremely powerful, and make up the vast current of business that flows like a river, with a life of its own. Swimming against the current is rarely productive and succumbing to the power of the current is what most people do. However, currents do actually change in the river over time. Rivers are not always predictable.

When you exercise conflict resolution skills, you can influence where the current is going by working with the flow instead of being carried away by it or fighting against it. We can shift the current by observing it, respecting it, and working with it—not fighting it, and making mutually beneficial adjustments according to the flow. No doubt, you will experience resistance, but you will be working with the current, not being carried away by it or pushing against it, in part, by discovering the sources of the conflict.

What if My Partner is Incapable of Communicating Truthfully About Anything?

Recognize that this could be a coping mechanism for other issues (e.g., perhaps hiding an addiction). If you are still legally bound to each other, seek legal counsel on how to proceed given the circumstances.

Ask your partner what it would take to be open and honest. Deliver concrete proof of good will and willingness to cooperate and work with them to work through the problem.

If problems continue, such as with those who are dealing with an untreated substance abuse problem or mental illness, sometimes the best thing you can do is be supportive in helping them seek treatment and while exiting the business relationship.

Sometimes you may be “stuck” with the troubled partner until legal dissolution occurs. In such a case, exercising diplomacy, basic communication, and conflict resolution skills until dissolution is finalized can help ease and expedite the process instead of explode it. Many people who seek litigation are at a point where they are very emotionally hurt.

Some people have the patience, energy, and empathy to take the difficult road of working with a difficult partner (e.g., a difficult spouse or sibling business partner), and yet others do not. Figure out where you stand on the issue, what you realistically can handle, try to make accommodation, seek the advice of independent counsel, and then make an informed decision.

STEP 5: Measure Progress or Non-Progress

Follow Up

After reaching some agreements about how to deal with the problem, there has to be some consensus about the next meeting time to assess if the solution(s) are working. If the solutions are not working, it can be a time to reassess your strategy for dealing with the conflict.

For instance, if you have repeatedly asked your partner to allow you to view critical business finance records, in the capacity as a partner, but there has been no movement after several weeks, you now can make a more informed decision as to whether or not to escalate the matter to independent counsel.

If it appears that progress has been made, take the time to praise your partner. Based on what their preferred learning style is (e.g., visual, aural, kinesthetic), try to communicate through your partner’s favored medium. Thus, if your partner responds visually, try sending a thoughtful thank you card or note; or if aurally, tell your partner that you appreciate their efforts.

Make sure that you genuinely communicate your appreciation, preferably face-to-face (or at least via video). A human interaction will always be appreciated over an email or even a phone call.


Interested in learning how to further develop your conflict resolution skills? Consider signing up for notices (never spam) of our latest articles delivered to your inbox. If you have a friend who might find this information helpful, please feel free to share.



Cal. Corp. Code §§16301(1)-16310 (West, Westlaw through Jan. 2016) [cited 17 Sep 2013]. Available from http://www.leginfo.ca.gov/cgi-bin/displaycode?section=corp&group=16001-17000&file=16301-16310)

Kross E, Berman MG, Mischel W, Smith EE, Wager T. 2011. Social rejection shares somatosensory representations with physical pain. Proceedings of the National Academy of Sciences of the United States of America [Internet]. [cited 17 Sep 2013]; 108(15): 6270-6275. Available from: http://www.pnas.org/content/108/15/6270.long

McKay M, Davis M, Faning P. 1983. Messages: the communication book. Oakland, CA: New Harbinger.



{ 0 comments… add one }

Please…no spam. Let’s have a personal and meaningful conversation. Thank you!