Business conflict.

A candid discussion can head off serious conflict between business partners.

In a small business, when tension arises between you and your partner there's nowhere to hide.

But tackling tension takes guts, so instead you may snipe or squabble: risky behaviour given that the business collapse rate is at its highest since the global financial crisis, according to the Australian Securities and Investment Commission's latest annual report.

Enter business coach Alex Pirouz, who has experience-based insight into defusing partner conflict. In December 2008, Pirouz founded direct sales firm Redline Corporation. At first, all seemed rosy between Pirouz and his entrepreneur business partner, Aleksandar Svetski, who he met at a Sydney neurolinguistic programming (NLP) course run by SRI Training.

Alex

Alex Pirouz and his business partner listed each others' strengths and weaknesses.

“We hit it off pretty well,” says Pirouz, who before Redline ran a marketing firm. Redline duly boomed, but on the way to acquiring 35 staff in nine months, Pirouz and Svetski began “butting heads”.

For one thing, Pirouz says, they both liked to lead and manage staff. For another, they had sharply different operational styles. Averse to micro-management, Pirouz gave staff “free range”. In contrast, Svetski was target-driven – tied to parameters and deadlines.

“He was direct in a nice way, but when he's direct and I'm more lenient, it just doesn't work,” Pirouz says.

The discrepancy caused confusion. Employees grumbled about lack of direction.

“They knew that, if I said something, it probably wouldn't stick tomorrow because Alek would come in on top and say something different,” Pirouz says.

Instead of “bottling up” the problem and letting it snowball, Pirouz and Svetski held a one-to-one summit. On a whiteboard, each businessman listed the other's skills and weaknesses.

Because Svetski was best at bonding with strategic partners and crunching numbers, they agreed that he should dictate strategy and govern how the company grew, Pirouz says.

People person Pirouz's niche became handling staff: he took care of daily management, assigning roles and responsibilities to “team leaders” and their members, aiming to inspire his sales force to better performance.

With the dual-track system established, Pirouz and Svetski tested it monthly, emphasising personal accountability.

“So we wouldn't go and yell at each other and say, 'Well you're hopeless at this and you suck at this. It was more, 'OK, the only way we're going to continue driving this company is if you tell me what you're doing wrong and how you could improve that - and I'll do the same.'”

The system successfully smoothed out friction. Still, after 15 months at Redline, as Svetski's focus shifted to the solar industry, Pirouz moved on, remaining friends with his partner, whom he still advises.

Like Pirouz, the co-founder of the personal finance website Money Crashers, Andrew Schrage, favours establishing frankness. Schrage met his partner, the internet marketer Gyutae Park, through mutual friends in Chicago a year before founding Money Crashers in April 2009. Schrage and Park's differences crystallised early on.

“I have always been a by-the-book, schedule-oriented person,” says Schrage. The former hedge fund analyst wanted planned meetings about critical areas including goals and progress “on a timely basis”: every week.

Park preferred to discuss events as they emerged, then address them and move on, without much follow-up, Schrage says.

So, Schrage adds, it was hard to grasp where they stood and whether marketing projects and other initiatives were being completed on time.

“Gyutae is very good about getting things done: I just never knew what he was working on,” Schrage says, adding that he and his partner were at extremes, spelling conflict.

In a stab at establishing harmony, Schrage “confronted” his partner. Cue a rational, “very candid” discussion. Schrage felt comfortable voicing dissatisfaction because their relationship was “very upfront”, he says.

“We essentially just laid it all out on the table. I explained my frustrations and how it was very difficult for me to know exactly what our progress was or what the latest update was on his end. It didn't get heated, though we did get very animated.”

Park must have felt “slightly offended”, Schrage admits. Still, their shared aim of making their start-up succeed helped them become “aligned”.

“We met in the middle,” Schrage says.

Now, they have scheduled meetings fortnightly rather than weekly or daily as Schrage originally wanted. In turn, Park keeps Schrage in the loop. The compromise fuels efficiency, Schrage says.

For more info on conflict resolution, visit the Victorian government's Better Health website.