The Mediation Process in Business Negotiations

In this article from the Program on Negotiation from the Harvard Law School Blog the authors offer insights on how mediation works in a law suit and to increase the probability of success it is very important to use a mediator that has experience in applicable business acumen. There are three main points in the article. These are:

1. Use mediators that have experience in the area under consideration.
2. Use a mediator with a strong personality.
3. Mediation works best when the facts are fairly clear and involve recurring issues.

Picking up on these three themes, I would like to offer some insights from my perspective.

Having mediated business disputes up to just under $1 billion involving fortune 500 companies to board of director issue in a not or profit entity, it is very important to have a mediator that understands businesses and business issues. Having a MBA in finance, over 30 years of business experience as an engineer, valuation specialist, team lead in research, controller, executive and business owner, I bring a unique set of skills to the table. Check out the resume of any potential mediator and understand the type of mediation being offered.

Other mediators have asked me how they can be more involved in business to business, business to government (IRS) and within business (board of directors, shareholder disputes, family succession planning issues, labor relations, equal employment opportunity, and management) type work. My response to them is what background do they have in these areas? Having experience in all of these areas from front line to executive level over 30 years with over 16 years of mediation experience has allowed me to address a wide variety of issues. Keep in mind experience is not the only consideration, but it is clearly one of the most important points. Most of my clients come to me by word of mouth based on other successful mediations. That is how to market in this environment from my perspective. Success breeds success.

It is very important to work with the parties before the mediation to develop trust. If I cannot do this up front I walk away from the assignment. There is no reason to waste time with a mediation if the parties are so entrenched that they are not willing to move off of their position. If that is the case litigation or arbitration is a better alternative. The mediator needs to have a strong personality. This is a key. I agree with the authors.

The mediator needs to stay true to the process agreed to up front with the parties. The mediator needs to be in control of the process and not accept behavior inconsistent with what the parties agreed to up front. When tensions arise the mediator needs to use techniques to de-escalate the situation. The mediator needs to be creative, asking questions at appropriate times that may allow the parties to explore interests not previously identified by the participants. In my opinion this how mediators can truly earn their money. When an “ah ha” moment arises by the parties this can be very rewarding for everyone involved.

Keep in mind that the mediator has no stock in the outcome when facilitating the mediation. There are essentially three types of mediation. These are evaluative (former judge provides his or her opinion of what might happen should the case go to court), facilitative (facilitates discussion on a specific issue(s)) and transformative (transforms the relationship of the parties regardless of the outcome of the issue). It is very important that the parties understand the role and type of mediator for a business mediation. In general business are looking for a facilitative mediator to address a specific issue or issues. At times the parties prefer an evaluative mediation to allow the parties to further understand how strong their case is should the case go to court from the perspective of a third party. This can offer insights to litigation. Except in family owned businesses with dysfunctional family members, transformative mediation is not generally used in business mediations.

Finally, regarding the last point provided in the article that “Mediation works best when the facts are fairly clear and involve recurring issues” I would offer that this may be true, but often the parties have a very different perspective of the facts. When the facts are clear and the business issue is recurring mediation works best. I would point out that with the right mediator that can help the parties explore the facts, or an interpretation of the facts from a different perspective exploring broader interests, this can be extremely helpful.

In my latest book, Peaceful Resolutions, I make the point relative to the chapter on mediation that it is not possible to push a rope. You can only pull a rope. If the parties are not seriously interested in mediation, then it is a waste of time to bring the parties into the process. This is why it is critical for the mediator to meet with the parties before the mediation to determine how flexible the parties are, develop trust, and explore interests with the mediator up front.

Rewording the three points slightly from above regarding business mediations I would suggest:

1. Use mediators that have business experience and someone that understands the parties in the area under consideration.
2. Use a mediator that will hold the parties to the agreed to process.
3. Mediation works best when the parties are interested in a mediated settlement.

Over the last five years I have seen my work in negotiations overtake my work in mediation as a percentage of my time. A skilled mediator can also bring both facilitative and negotiation skills when hired as a consultant to a negotiation by one of the parties. By helping the client explore additional self-interests and asking questions of the other party during a negotiation it is quite possible that interests can be further expanded allowing the client to reach a negotiated agreement more favorable than could have been negotiated by the parties by themselves. This can save the parties considerable time and money.

Michael Gregory, ASA, CVA, MBA is an expert in conflict resolution dedicated to making individuals, organizations, thought-leading entrepreneurs and executives more successful. Michael’s books, including his NEW BOOK now also available as an ebook, Peaceful Resolutions are available at this link.  Free resources are available online at www.mikegreg.com. Check out the blog. Contact Mike directly at mg@mikegreg.com or call (651) 633-5311.