Lessons from the pirates: Dispute resolution

June 21, 2018

By Danielle Walsh

Photos © www.bigstockphoto.com[1]
Photos © www.bigstockphoto.com

The question of how disputes will be dealt with was just one of the issues covered in Captain John Phillips’ pirate code of conduct. The code included the following rules:

“1. If there is any doubt in a dispute between ye Brothers, a court of honours is to decide the verdict. If a Brother is proved in the wrong, the first time he shall be pardoned, but should he offend again, he shall be tied to a gun, and there shall receive from each of the ship’s company one strike of the lash. The same punishment shall be given to ye among us, including officers, who shall get drunk, while on the ship, to the point of losing ye senses.

2. Quarrels between several Brothers whilst aboard ye ship shall be settled ashore with pistol and sword. He that draws first blood shall be the victor. No striking another whilst aboard ye ship.”

Now, these methods of solving disputes may not be ideal for families in business. However, the rules were clear. The pirates knew what to expect if they had a disagreement—they would be pardoned once, and then they could expect to be punished or brought ashore, where the first to draw blood would win. The key to success was the fact all pirates knew exactly how disputes would be dealt with, and the fact the rules also outlined certain unacceptable actions.

This is often a missing link in family businesses. Poor behaviour or performance in family members can often go uncorrected for far too long. Understandably, no parent, aunt, uncle, or sibling wants to have to point this out to another family member, but this means those behaviours continue in the long term as they go unpunished. This is where the pirates’ code comes in.

For instance, the pirates’ rules say it is unacceptable for crew members to drink so much they lose their senses. Although this is a subjective behaviour (at what point are you deemed to have lost your senses?), the associated repercussions were made crystal clear. Understanding the related punishment acted as a major deterrent, unlike in a family business, where there tends to be more lenience and no punishment for poor conduct. Family members often take it for granted they will never be fired from the family business, thinking, “Mom and/or Dad would never do that to me!”

When there are no clear expectations in place, it can be easy for disputes to arise in family businesses.[2]
When there are no clear expectations in place, it can be easy for disputes to arise in family businesses.

The code also says no pirate can strike another aboard the ship, helping maintain a sense of order and harmony onboard. Having rules of conduct for siblings or cousins in a family business can similarly support a sense of professionalism. This is a key point in maintaining a positive work environment for non-family employees and managers.

In other words, setting rules related to how disputes will be dealt with—as well as desired behaviours—can play a significant role in maintaining a respectful and professional workplace. Although family businesses often set guidelines with respect to employment, ownership, and exit strategies, as these topics tend to bring up a lot of unanswered questions, many tend to forget to address disputes and proper conduct.

Keeping the peace

Families in business should ensure they, like the pirates, have a way of dealing with disputes. The last thing you want is for an issue to remain unresolved and certain family members to start soliciting others to be on their side—before you know it, everyone is involved!

In a previous article[3] for Jewellery Business, I indicated a dispute resolution process (DRP) should provide a forum in which family members can work to resolve conflict related to the family business. Left unattended, family conflict will negatively impact relationships and, in turn, the business itself.

To mitigate disagreements, you could consider implementing a sibling or cousin code of conduct.[4]
To mitigate disagreements, you could consider implementing a sibling or cousin code of conduct.

The terms of reference for this dispute resolution process should be outlined. Important aspects of the DRP could include the following points:

  1. The owners will establish a dispute resolution process to address conflict that does, will, or can negatively impact the business. One of the owners (or a trusted advisor) will chair the process.
  2. The owners will encourage and support the use of the dispute resolution process as the vehicle to deal with family business-related conflict. The chair will manage the process through which the conflict is to be resolved. In other words, she or he will schedule a meeting with the appropriate players, then conduct the meeting with the objective of facilitating discussions and finding a resolution to the issue.
  3. The chair will consider using internal trusted advisors or an outside facilitator (e.g. an expert in family business) to assist in dealing with the conflict.
  4. The chair will inform all family members of the existence of the conflict management process and how it operates.

The most important consideration in setting up a DRP is ensuring the chair is trusted by all. If this is not the case, then family members will not use the process. It is important to ensure the person chosen is considered impartial. As mentioned above, he or she can also seek help from a facilitator to solve disputes.

The chair can also be different depending on the topic of the dispute. For example, if it’s business-related, the chair could be a senior owner or CEO, while conflict related to the succession plan[5] could be settled by the family business practitioner who helped put it together.

Ensuring proper conduct

Having a predetermined dispute resolution process (DRP) all family members are aware of can help maintain harmony in the family business.[6]
Having a predetermined dispute resolution process (DRP) all family members are aware of can help maintain harmony in the family business.

As mentioned, the pirates’ rules also describe certain inappropriate behaviours and the related punishments. Similarly, many families in business now implement a sibling or cousin code of conduct that outlines desired behaviours in the workplace.

A code of conduct could include the following expectations:

  1. All family members will perform their roles and responsibilities properly, and if not, they will be let go.
  2. Family members are to speak to one another with respect and use proper names when addressing family (i.e. not calling your mother “Mom,” but by her name).
  3. Personal issues amongst family members should be left at home and dealt with outside of the business and business hours.
  4. Family members are not to interrupt one another in meetings.
  5. Family members must always strive to be punctual, polite, and humble.

A family business that has a clear process for dealing with disputes, as well as a code of conduct, has a much higher likelihood of maintaining family harmony and overall business success.

Full steam ahead

The fifth and final part of this series covers governance[7]. Without a clear leader and chain of command, any ship would be a disaster! The same can be said for your family business.

Danielle Walsh is founder of Walsh Family Business Advisory Services, a consulting company specializing in helping family-owned and operated businesses navigate the rough waters of management and ownership succession. She is a certified public accountant (CPA), chartered accountant (CA), and holds certificates in family business advising and family wealth advising from the Family Firm Institute (FFI). Walsh is also president of the Ottawa chapter of the Family Enterprise Exchange. She developed her philosophy and desire to help family businesses from her father, Grant Walsh, who has worked as a family business practitioner for the last 25 years. Walsh also currently teaches the first family business course offered at the undergraduate level at Carleton University in Ottawa. She can be reached via e-mail at danielle@walshfbas.com.

Endnotes:
  1. [Image]: https://www.jewellerybusiness.com/wp-content/uploads/2018/06/bigstock-Young-businessman-wearing-tric-123537587.jpg
  2. [Image]: https://www.jewellerybusiness.com/wp-content/uploads/2018/06/bigstock-136459835.jpg
  3. previous article: https://www.jewellerybusiness.com/features/family-business-continuity-well-oiled-machine/
  4. [Image]: https://www.jewellerybusiness.com/wp-content/uploads/2018/06/bigstock-Angry-Friends-Arguing-In-A-Cof-100577681.jpg
  5. succession plan: https://www.jewellerybusiness.com/features/keys-success-means-methods-training-successor/
  6. [Image]: https://www.jewellerybusiness.com/wp-content/uploads/2018/06/bigstock-Young-Couple-Choosing-Wedding-223379185.jpg
  7. governance: https://www.jewellerybusiness.com/features/lessons-from-the-pirates-governance/

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