Some personalities do not mix. Some people are difficult. Motivations sometimes run contrary to the stated goal. Translation: some teams cannot be fixed. Even expert team builders agree on that.
If a dysfunctional team is pulling your business down, the best you can do is break up the team.
What about conflict in partnerships?
When a business partnership ceases to work, there are 4 options.
1. Ignore the problem until it blows up
2. Separate functions as much as possible to minimize necessary interaction
3. Break up the partnership
4. Close the business and divide the spoils
Number 1 isn’t a smart choice. When partnership problems hit the boiling point, the results are disastrous. Remember, a partnership is made of 100% equal actors. That means any partner can enter a bad agreement or take money. Unless the business is organized as a corporation with specific rules in the partnership agreement governing such actions, your partner can walk off with the cash. It’s better to act before reaching the point of irreconcilable differences.
Number 2 isn’t much better but it can work if mechanisms can be put in place to verify that no partner is stealing from the business. Trust but verify. Better yet, don’t trust and verify. But also try to stay out of each other’s realms. This can work but will hinder the total productivity of the business. This arrangement often leads to a team mentality. “I’m with John,” and “you’re with Hank.” Not good.
Number 3 is the best option if there are provisions in the partnership agreement for ‘voluntary exit’. If a partner wants out, there should be a procedure and a means of setting the price for a partner’s share written in your documents. This is a bit like a pre-nup. If your partnership agreement doesn’t have those provisions, get them written in as soon as possible.
Number 4 is the most common outcome. When a partnership is stressed, partners care less about the success of the business and more about what they can grab. Have you ever seen siblings fight over the possessions of deceased parents? Even the most worthless nick-knack becomes invaluable memorabilia. I’ve seen real estate liquidated at a fraction of the value simply to cash out the hostility. What a waste.
If you are starting a business, think very carefully about whether a partnership is right for you. It’s rare that 2 or more people can have a long functioning and happy business relationship. If you decide to form a partnership, make certain you have very solid partnership documents.
I tell my clients that good partnership documents both protect you and prevent you from harming your partners. Many agreements are drawn from templates that don’t even consider circumstances like the disability of a partner.
Keep in mind that some teams cannot be fixed and the longer you wait to address the situation, the less likely the business will survive the split.
Chris Reich, Business Adviser