Chapter 7

What are the first considerations regarding organization? According to the U.S. Small Business Administration, One of the most important decisions entrepreneurs make is how to legally set up their businesses. The choice can be a wise move or a costly mistake with regard to taxes paid, protection from liability, and the amount of resultant flexibility in running the operation.

The form of organization selected depends on the following factors:

  • Capital structure
  • Tax considerations
  • Management method
  • Number of people associated in the venture
  • Kind of business or operation
  • Cost and formality of the organization
  • Ability and/or desire of owners to isolate personal assets from claims of the business' creditors
  • Perpetuation of the business

The initial choice of a business form, even if it achieves optimum results in the start-up phase, may require adjustment or alteration as the business matures. It is important to periodically re-examine the appropriateness of the type selected.

Persons wishing to start a business in Iowa can access a wide range of free, or very low cost, services when trying to decide which type of business is best suited to the needs of their Idea. Iowa State University Extension, U.S. Small Business Administration, USDA - Rural Development, Iowa Bankers Association, Iowa Department of Economic Development and the Iowa Department of Agriculture and Land Stewardship are just a few sources of very good information.

7.1 What are the basic types of business structures?

  • sole proprietorship
  • cooperative

    • traditional cooperative
    • value added cooperative
  • limited liability company
  • general partnership

    • limited partnership

    • limited liability partnership
  • corporation

    • "S" corporation
    •  "C" corporation


Sole Proprietership

This is the easiest and least costly way of starting a business. A sole proprietorship can be formed by finding a location and opening the door for business. There are likely to be fees to obtain business name registration, certificate and other necessary licenses. Attorney's fees for starting the business will be less than the other business forms because less preparation of documents is required and the owner has absolute authority over all business decisions.


A cooperative business belongs to the people who use it. The member/owners use the cooperative as a source for the goods and services they need. Member/owners share in the control of their cooperative, meet at regular intervals, review detailed reports, and elect directors from among themselves. The directors in turn hire management to oversee the day-to-day affairs of the cooperative in a way that serves the members' interests.

Over the last twenty years, "value added" cooperatives have evolved to provide more specialized services than those typically offered by traditional cooperative models. Although still member/owner organizations, the structures of value added cooperatives differ from those of traditional cooperatives in several ways:

Traditional Cooperative

  • Personal liability limited to investment
  • Ownership generally not transferable
  • Life of traditional cooperative is perpetual
  • Centralized management, no less than five board members
  • Distributions of earnings based on level of patronage to the cooperative
  • Shareholders taxed for the amount of earnings allocated to them. Retained earnings are taxable to the cooperative
  • Delivery rights are essentially open
  • Services tend to be covering wide range.

Value Added Cooperative

  • Personal liability limited to investment
  • Ownership generally transferable to any other member or person who is board approved
  • Life of value added cooperative is perpetual
  • Centralized management, no less than three board members
  • Distribution of earnings based on level of patronage to the cooperative
  • Shareholders taxed for the amount of earnings allocated to them. Retained earnings are taxable to the cooperative.
  • Delivery rights limited or closed. Membership has delivery rights and obligations.
  • Primary focus tends to be processing.

Limited Liability Company

Limited Liability Companies (LLCs) are a hybrid form of entity that combines some characteristics of a corporation with other characteristics of a partnership. The LLC offers limited liability for all of its members and the option of centralized management (which the LLC may choose not to adopt). The LLC also offers partnership tax status with flexibility in handling varied contributions and types of capital. The LLC requires a tailored agreement that spells out all details, whereas corporations may often be formed with standardized documents.

General Partnership

A general partnership can be formed simply by an oral agreement between two or more persons, but a legal partnership agreement drawn up by an attorney is highly recommended. Legal fees for drawing up a partnership agreement are higher than those for a sole proprietorship, but may be lower than incorporating. A partnership agreement could be helpful in solving any disputes. However, partners are responsible for the other partner's business actions, as well as their own.

A Partnership Agreement should include the following:

  • Type of business
  • Amount of equity invested by each partner
  • Division of profit or loss
  • Partners compensation
  • Distribution of assets on dissolution
  •  Duration of partnership
  • Provisions for changes or dissolving the partnership
  • Dispute settlement clause
  • Restrictions of authority and expenditures
  • Settlement in case of death or incapacitation

Limited Partnership

Limited Partnerships are much the same as Limited Liability Companies, but must include one partner (the general partner) having unlimited liability for the debts of the partnership. Special rules govern whether a corporate general partner is carrying enough risk to qualify the entity as a partnership versus a corporation for tax purposes.

Limited Liability Partnership

Limited Liability Partnerships (LLPs) are general partnerships that have chosen LLP status. Partners of an LLP have unlimited liability for their own actions but limited liability for the actions of their partners. LLP status may work for businesses that have typically been conducted as general partnerships and whose partners now wish to limit their potential liability for each others' actions. Special rules govern the LLP election by partnership of licensed professionals.


Think of a corporation as legally separate from its shareholders. This is the most important feature distinguishing it from a partnership or proprietorship. It is definitely best to seek legal counsel when setting up a corporation.

This type of business is usually the most costly to form, especially if organizational problems are complex. People usually incorporate to limit personal liability for the debts and liabilities of the business. However, with many new businesses this limit of personal liability applies only to judgments brought against the company for negligence, defective products or frivolous suits.

In fact, the owner(s) of a new business will usually remain liable for the repayment of loans and other debts because most major creditors, especially lenders, will try to limit their risks by requiring owners to pledge their personal assets as security for a debt. In some cases, an officer or employee of a corporation may also be personally liable for failure to withhold taxes.

A corporation is a separate legal entity and a more structured form of business. It can continue to function even without the existence of original ownership or other key individuals. It also has advantages in terms of enabling employees to participate in various types of insurance and profit sharing. A corporation has more flexibility in terms of different approaches to taxation.


The "S" corporation provides the benefits of incorporation while also eliminating federal corporate income tax by passing the tax liability directly to the stockholders. The IRS allows all profits to pass through to the shareholders personal tax returns. "S" status is available to small companies with up to 35 individual shareholders. "S" corporations can only issue one class of stock, no corporate shareholders are allowed, and all shareholders must be U.S. citizens or taxpayers.


If a corporation does not qualify for "S" corporation status to be taxed as a small business, then it must be treated as a "C" corporation. The decision to be a "C" corporation is one of default - a corporation is automatically a "C" corporation unless it obtains approval from the Internal Revenue Service to be taxed under a different provision. If the corporation will offer it's stock to the public via a stock exchange, for example, it would not qualify as an "S" corporation. Limited Liability Companies are not part of this discussion because they are taxed as partnerships and enjoy pass-thorough taxation similar to "S" corporations but without the restrictions, including the number and qualification of shareholders.

7.2 What are the steps to starting up a value added cooperative?

  1. Hold a meeting of leading persons to discuss a need that forming a cooperative might meet.
  2. Hold an exploratory meeting of interested persons. Vote whether to continue. If affirmative, select a steering committee.
  3. Conduct a survey to determine cooperative feasibility.
  4. Hold a second general meeting to discuss the survey results. Vote on whether to proceed.
  5. Conduct a market or supply and cost analysis.
  6. Hold a third general meeting to discuss the results of the market or supply and cost analysis. Vote by secret ballot on whether to proceed.
  7. Conduct a financial analysis and develop a business plan.
  8. Hold a fourth general meeting to hear results of the financial analysis. Vote on whether to proceed. If affirmative vote on whether the steering committee should remain intact or whether changes should be made.
  9. Draw up necessary legal papers and incorporate.
  10. Call a meeting of all potential charter members to adopt the bylaws. Elect a board of directors.
  11. Call the first meeting of the board of directors and elect officers. Assign responsibilities to implement the business plan.
  12. Conduct a membership drive.
  13. Acquire capital - develop a loan application package.
  14. Hire a manager
  15. Acquire facilities
  16. Start up operations.

The primary organizational documents for cooperatives are the Articles of Incorporation and the Bylaws. Other legal documents may include the membership application and membership certificate.

The Articles of Incorporation state the kind and scope of the cooperative business. Often broad operating authority is stated even though services may be limited at the beginning. The articles usually contain the following:

  • name of the cooperative
  • principle place of business
  • purposes and powers of the cooperative
  • proposed duration of the cooperative
  • names of the incorporators
  • a provision for redemption of member equity although sometimes this is in the bylaws

The Bylaws state the rights and obligations of the cooperative's board of directors and members and guide the day-to-day operations of the cooperative. The bylaws usually specify the following:

  • requirements for membership
  • rights and responsibilities of members
  • grounds and procedures for member expulsion
  • procedures for calling and conducting membership meetings
  • voting procedures
  • procedures to elect or remove directors and officers
  • the number, duties, terms of office, and compensation of directors and officers
  • time and place of the directors meetings
  • dates of the fiscal year
  • information on how the net earnings will be distributed

See for sample legal documents for cooperatives.

Chapter 8

What types of things can be expected when people work in groups?

All groups are unique; all groups share similarities. As they work toward their goals, all groups tend to go through similar processes and must fill certain roles. At one time or another, every group must deal with difficult people or a troublesome situation.

Group behaviors

Groups go through five phases of development:

  • forming
  • storming
  • norming
  • performing
  • transforming, or ending

The phases usually follow in order, but at times, groups find they must go back to an earlier phase to repeat a process.

Forming Phase

The group begins as an assortment of individuals who have a lot to do. The mood is upbeat and a little uptight, because working with new people is both exciting and nerve-wracking. There may be anxiety and confusion as the group begins to organize. For some people, it may be too much too soon.

Members must get acquainted and decide to cooperate. They have to figure out how to make decisions and set goals. They also have to decide what the role of each person in the group will be.

The following may be characteristics of your group:

  • Members may be concerned with personal safety in the group.
  • Members are concerned with acceptance and fear rejection.
  • Members communicate in a tentative and very polite manner.
  • The members behave in ways that suggest a need for dependable and directive leadership.
  • The leader is seen as benevolent and competent.
  • The leader is expected and encouraged to provide members with direction and personal safety.
  • The leader is very rarely challenged.
  • Goals are not clear to members, but clarity is not sought.
  • Members rarely express disagreement with initial group goals.
  • The group assumes that consensus about goals exists.
  • Role assignments tend to be based on external status, first impressions and initial self-presentation of members, rather than on matching member competencies with goal and task requirements.
  • Member compliance and conformity is high.
  • Communication tends to be centralized.
  • Participation is generally limited to a few vocal individuals.
  • Overt conflict is minimal.
  • A lack of group structure and organization is evident.
  • Cohesion and commitment to the group are based on identification with the leader rather than other factors.
  • Subgroups and coalition are rare at this stage.

Appropriate leadership behaviors in the forming phase:

  • Minimize speaking to lessen the group's dependency on leadership direction and avoid establishment of a centralized communication style.
  • Minimize singling out individuals by using group-level interactions. (E.g. "People are working hard," or "How will this decision help us reach our goals?")
  • Focus actions on creating a safe environment, open communication system and individual disclosure and work.
  • Minimize personal activity.
  • Continually assess member actions for their impact on group dynamics.

Appropriate membership behavior in the forming phase:

  • Be friendly as you attempt to understand others.
  • Voluntarily share.

Storming phase

During the storming phase, anxiety increases and group morale may sink. There may be some conflict. During this phase the group may "bottom out." It's normal, and it will pass. Think of it as essential tension - accept it and prepare for it. It's energy the group can use.

Group members may disagree; voicing differences can benefit the group. One way to manage storming is to generate ideas to solve problems. Ideas are the key to group creativity.

The following may be characteristic of your group in this phase:

  • Conflicts about values surface.
  • Disagreements about goals and tasks emerge.
  • Increased feelings of safety allow dissent to occur.
  • Dissatisfaction with roles may surface.
  • Clarification of goals begins.
  • Role clarification also begins.
  • Members challenge the leaders.
  • Subgroups and coalitions form.
  • Group intolerance of subgroups and coalitions is manifested.
  • Increased member participation is evident.
  • Decreased conformity begins.
  • Deviation from emerging group norms occurs.
  • Attempts at conflict management are evident.
  • If efforts to resolve conflicts are successful, increased consensus about group goals and culture become evident near the end of this stage.
  • Conflict resolution, if successful, increases trust and cohesion.

Appropriate leadership in the storming phase:

  • Appreciate members' conflicts. Accept changes in members' feelings toward the leader.
  • Encourage members to express their views regarding leader-member and member-member relations.
  • Use conflicts with the leader to help the group fairly redistribute power and influence. If a member challenges the leader, ask for proactive suggestions rather than debating the validity of the challenge. If members disagree, invite them to explore this opportunity to learn about each other. The goal is a united culture without sacrificing individuality.
  • Intervene in ways that model compromise, tolerance and effective conflict resolution.
  • Help the group forge a unified set of beliefs and values.
  • Encourage exploration of individual beliefs and values.
  • Exercise fortitude and be slow to correct misperceptions of personal motivations and intentions. · Welcome redistribution of power and influence.
  • Encourage members to share feelings and reactions to personal leadership, using these times as opportunities to explore the larger reaction to authority.
  • Work to create positive relationships with members by helping individuals achieve their own goals.
  • When a member challenges the leader's skills, ask for suggestions for improvement.
  • When members fight, help the group understand this is a good opportunity to learn more about each other and to build the group.

Appropriate membership behavior in the storming phase:

  • Expect conflict and view it as a step toward self-exploration and group building.

Norming phase

In the norming phase, groups truly begin to act as a group, rather than as individuals. The group has an identity, clear expectations and norms (informal rules about group behavior). Norms make it possible to count on certain things being done and other things not being done.

A group in the norming phase has cohesion. Members like each other and want to remain in the group. The more people in the group have similar tastes and values, the more the group will stick together and be productive.

Norming is essential for a group to achieve its goals, but problems may crop up. Sometimes people are so concerned about getting along they don't think critically and consider all their options. Your group can keep its options open by airing doubts and exploring alternatives.

Groups may make poor decisions during the norming phase. Maybe the group had faulty information, made poor assumptions or came to the wrong conclusions. The group may have defined the problem poorly or defined the wrong problem. It may have mis-evaluated the consequences or violated procedures. Good decisions are informed decisions, so listen to everyone's ideas, positive and negative.

The following are characteristics of groups in the norming phase:

  • Increased goal clarity and consensus are evident.
  • Roles and tasks are adjusted to increase the likelihood of goal achievement.
  • The leader's role becomes less directive and more consultative.
  • The communication structure appears to be more feasible.
  • The content of communication becomes more tasks oriented.
  • Pressure to conform increases again.
  • Helpful deviation is tolerated.
  • Coalitions and subgroups continue to form.
  • Increased tolerance of subgroups and coalitions is evident.
  • Cohesion and trust increase.
  • Member satisfaction increases.
  • Cooperation is more in evidence.
  • Individual commitment to group goals and tasks is high.
  • Conflict continues to occur.
  • Conflict management strategies are more effective.
  • The group works to clarify and buildgroup structure that will facilitate goal achievement and productivity.

Some groups never reach a warm, peaceful co-existence, but their goal is held so intently, they can remain focused as a group. The American Revolution may be such an example. Many members of the group never liked each other, but tensions forced better outcomes on issues of language and governance.

Appropriate leadership in the norming stage:

  • Help individuals work on their goals by intervening in ways that heighten member awareness.

Appropriate membership behavior in the norming stage:

  • Implement new norms within the group.
  • Maintain focus on real-world (goal) change.
  • Constructively give and receive feedback.
  • Be open to new ideas and ways of reacting.

Performing phase

A group reaches the performing stage when it "gets down to business." Leaders delegate responsibilities and group members go to work. The group's resources are fully mobilized to achieve a goal. There still may be breakdowns from time to time. However, if your group keeps working together, you'll get through those difficult times.

The following may be characteristic of your group at this stage:

  • Members are clear about group goals.
  • Members agree with group goals.
  • Tasks are appropriate to group versus individual solutions.
  • Members are clear about their roles.
  • Members accept their roles and status.
  • Role assignments match member abilities.
  • The leadership style matches the group's developmental level.
  • Delegation is the prevailing leadership style.
  • The group's communication structure matches the demands of the task.
  • The group has an open communication structure in which all members participate and are heard.
  • The group gets, gives and utilizes feedback about its effectiveness and productivity.
  • The group spends time defining problems it must solve or decisions it must make.
  • The group spends time planning how it will solve problems and make decisions.
  • The group spends enough time discussing the problems and decisions it faces.
  • The group chooses participatory decision-making methods.
  • The group implements and evaluates its solutions and decisions.
  • Voluntary conformity is high.
  • Task-related deviance is tolerated.
  • The group norms encourage high-performance and quality.
  • The group expects to be successful.
  • The group encourages innovation.
  • The group pays attention to the details of its work.
  • The groups accepts coalition and subgroup formation.
  • Subgroups are integrated into the group as a whole.
  • Subgroups work on important tasks.
  • The group contains the smallest number of members necessary to accomplish its goal(s).
  • The group has access to the technical and people resources necessary to accomplish its tasks.
  • The group has access to technical or interpersonal consultation as needed.
  • The group has access to technical or human relations training as needed.
  • The group has a defined work territory.
  • The group is allotted sufficient time to accomplish its goals.
  • Subgroups are recognized and rewarded by the group.
  • The group is highly cohesive.
  • Interpersonal attraction among members is high.
  • Members are cooperative.
  • Periods of conflict are frequent but brief.
  • The group has effective conflict-management strategies.

Appropriate leadership in the performing stage:

  • Encourage independence and confidence in members.
  • Transfer problem solving and influence to group members.

Transforming or ending phase

Inevitably, groups reach the transforming or ending phase. They may go back to earlier phases or regroup to tackle a new task. Some members may leave the group, or new members may join. A group may disband after accomplishing its task. For some groups, transforming is a time of sadness or loss. Members are disappointed that their goal(s) has been achieved or that the group may disband. But for other groups, transforming is a satisfying time as members look forward to new activities.

For groups that will continue, it is a good idea to redefine group goals and roles. This will help renew group commitment and visions, re-energize current members and build a sense of ownership and belonging among new members.

The following may be characteristic of group members at this stage:

  • The ability to manage conflict may degenerate.
  • Work activity may increase or decrease abruptly.
  • Feelings of solidarity may increase. Increased expressions of positive feelings among members may occur.
  • Stress and anxiety among members is evident.
  • Some members may become apathetic with regard to the group.

8.1 What are some pointers on handling conflict in a group?

How to handle group conflict

Group conflict is essential to a group's cohesion. It helps groups identify areas of common values; provides greater group stability through shared beliefs; helps to balance the differences between extreme positions; and helps to clarify roles and structures. To have effective conflict, it is necessary to create a safe environment. Frequently, if managed constructively, conflict can be a strong indicator of group's effectiveness.

A problem-solving method usually is the first thing people employ in a conflict situation. If that method doesn't bring about quick resolution, contentious tactics may be used until escalation of the conflict forces participants back to problem solving. The following are key steps in problem solving to move the conflict toward a win/win for all parties:

1. Separate the people from the problem. Put yourself in their shoes. Don't deduce their intentions from yours. Don't blame them for your problem. Discuss each other's perceptions. Look for opportunities to act consistently with perceptions to demonstrate your good faith in a negotiation. Give people a stake in the outcome by involving them in the process. Allow windows for face saving, making your proposal consistent with their values. Recognize and understand emotions of all parties. Listen actively. Speak about yourself rather than them. Speak for a purpose. Build a working relationship. Be hard on the problem, soft on the people.

2. Focus on underlying interests not stated positions. Ask "why" and "why not" for each position. Reconcile interests (not positions), since interests define the problem. (Behind opposing positions lie shared and conflicting interests.) Acknowledge others' interest as part of the problem. Acknowledge their interests before you state what you want. Look forward rather than arguing the past. Always be firm on interests and flexible on solutions.

3. Generate a variety of options before deciding what to do. Be creative in how you can maintain or enhance the relationship with others in the conflict. Judgment hinders imagination. Brainstorm ideas by separating invention from imagination. Look through the eyes of different experts. Change the scope of the agreement to make it easier. Start with easier issues and work out resolutions that build momentum for the more difficult issues. Dovetail differing interests. Make their decision easy.

4. Base agreement on objective criteria and fair procedures. Frame each issue as a joint search for an objective standard. Be open to reason to the type and application of standards. Yield only to principle, never to pressure.

5. Prepare in advance what you'll do if negotiation fails (i.e. your walk-away alternative). Know your best alternative plan if you leave an interest-based negotiation. Know their best alternative plan. Be patient and persistent in negotiations until your walk-away alternative becomes the better choice. Never be a victim. If you have to, leave them knowing you worked hard on the problem. Stay true to your interests, and treat others as you would want to be treated.

To help you use interested-based negotiation effectively, keep the following behaviors in mind as you negotiate.

  • Keep your composure.
  • Focus on interest, yours and theirs. Know their walking shoes as well as your own.
  • Keep focused on the real issues.
  • Recognize dirty tactics. Look for multiple clues and incongruent communication. Maintain a healthy skepticism.
  • Know your hot buttons. Pause as needed to break an automatic reaction to being pushed.
  • Maintain an interest in the long-term relationship of participants.
  • Let them save face. Use reasonable requests such as, "You won't mind if I check this out?" · Ask questions such as, "What would you do in my place?" Invite specific criticism.
  • Use humor, laughing at yourself and your shared situation.
  • Respond to reason not personal attacks or force.
  • Allow them to vent frustrations, if it moves the negotiation ahead. Respond by saying, "I respond better to knowing your interests or figuring out options." Warn but do not threaten by saying, "Here's what the situation will be." Then bring everybody back by talking about the problem. Ask, "What do you think will happen if we don't resolve this conflict?" or "How do we make sure this doesn't happen again?"

8.2 What types of actions tend to improve problem solving exercises?

The following communication rules can improve problem solving:

  • State your problem and interests. Speak with "I" statements. Acknowledge the other's problem and interests. Avoid name-calling and answering a complaint with another complaint.
  • Listen to the other parties and know their interests. Ask "why," "why not," and "what if" questions to better understand. Use silence to demonstrate you are willing to listen or to help move the other side into a position to listen more effectively to you.
  • Offer an apology when appropriate.
  • Stay in the present and the future. The past has already been lived.
  • Stick to the present topic.
  • Look for areas of agreement.
  • Set the time for the next discussion and take a time out if the discussion deteriorates.
  • Use mutual restating until a party who continues to feel misunderstood feels understood appropriately.
  • State requests for change in behavioral terms. Don't ask for changes in attitude or feeling just to be different.
  • Consistently express verbal and body messages. If negative feelings must be expressed, only use words. Show confidence in the process, relax, use good eye contact and show interest.

Non-verbal communication is important. According to research by Alfred Mehraian, the persuasiveness of a message depends on:

  • Non-verbal communication (55 percent), includes facial expression, movement and gestures.
  • Voice communication (33 percent), includes the tone with which the message is conveyed such as confidence, desperation, anger, condescension.
  • Data communication (10 percent), includes the actual meaning of words and any supporting information.

You can listen to each other and still have differences. These characteristics apply:

  • Listen to understand.
  • Accept that what the other person is saying is true for him/her. Respect the others' feelings.
  • Repeat for clarification.
  • Find a point of agreement.
  • State or restate your own opinion.
  • Acknowledge another's statements and state, "I will give it serious consideration before I take further action."

When you receive feedback:

  • Listen carefully and repeat what you heard.
  • Ask to fully understand.
  • Say thank you and state that you will consider their comments before taking further action.
  • Seriously reflect on what you heard before taking further action.

When you give feedback:

  • Separate the behavior from the person. Be specific and factual about behaviors. Avoid value judgments and demands for a change in attitude or emotion.
  • Describe how you feel
  • Describe how this affected you.
  • Be sensitive and respectful. Present this feedback as a gift, then leave it behind.

These are strategies to guide action in conflict:

  • Start cooperatively with positive attitudes about the other person or team.
  • Set boundaries for negative behavior.
  • Be forgiving.
  • Keep your strategy simple.
  • Continue to put forth conciliatory gestures even when locked in a negative pattern.
  • Eliminate envy by attempting to do no better in any transaction that the other party.

When addressing a problem or conflict, ask problem-solving questions. Let the problem be the teacher. These strategies can help:

  • Ask "why?" questions. "Why is it that you want that?" or "Why is that a problem?"
  • Ask "why not?" Through their criticism seek to understand their interests.
  • Ask "what if?" Use this to explore options without holding anyone to a position. Remember to invent first and evaluate later.
  • Ask for the other party's advice. "What would you suggest that I do?" "What would you do if you were in my shoes?" "What would you say to my clients?"
  • Ask "What makes that fair? You must have good reasons for thinking that is a fair solution. I'd like to hear them."
  • Ask open-ended questions. Preface questions with "how, why, why not, what or who."
  • Tap into the power of silence. Silence is the gestation period that can bring forth creativity and understanding.
  • The turning point is when you change the game from positional bargaining to problem-solving negotiation.


This section was adapted from: Fisher, Roger, and Ury, William; Getting to Yes, Sternweis, Laura, and Wells, Betty; The Ins and Outs and Ups and Downs of Groups; ISU Extension; Wheelan, Susan A.; Group Processes: A Developmental Perspective; Ury, William; Getting Past No;

8.3 When does a group function best?

One common condition for effective groups, whatever the size is that members perform different jobs. The group roles described here are the dreamer, quality controller, doer, team builder, groups leader, recorder and facilitator.

The dreamer

The dreamer is good at generating ideas for solving problems and often is excitable and talkative. All things are possible. Some of this person's ideas are wild, but some are true gems. Every group needs dreamers, but the be effective, dreamers need group support.

During the forming phase, dreamers may have lots of ideas about how to get organized and about possible group goals. They may really shine the in the storming phase as they help the group generate ideas to solve problems. During norming, dreamers may see some missed consequences of a decision. Listening to their ideas may help your group to make better decisions.

The quality controller

The quality controller evaluates ideas. This person is a constructive critic who maintains group standards, spots problems and suggests more workable solutions. The quality controller may help the group think critically throughout the group phases. During forming, this person may evaluate decision-making techniques and possible goals to help the group make good choices. In storming, he or she evaluates the many ideas the dreamers have suggested. During norming, the quality controller may be that gentle voice encouraging group members to think critically about all possible options in a situation. This person makes sure that group standards are maintained during performing.

The doer

Doers are goals setters getting things done. They may get frustrated with slow progress and at times may be impatient with dreamers. However, they usually complement dreamers. The take a new idea, refined by the quality controller and run with it. They figure out how to turn ideas into reality.

Doers like having things to do--so they need to be kept busy during all of the group phases. They'll be eager to set goals during forming and be ready to go to work. However, their frustration with slow progress may contribute to the "bottoming out" that can occur during storming. But they perk up as the group begins to solve its problems. During norming, doers can begin to take action on those ideas that the dreamer has suggested and the quality controller has refined. Doers really "show their stuff" during the performing stage. They'll get the work done.

The team builder

The team builder supports group members and builds morale. This person helps the group work together and takes time to get to know the other members. He or she helps keep spirits high and works hard to consider everyone's feelings.

The team builder has an important role during the forming phase, when new group members are meeting each other. It is part of the team builder's job to get to know group members and keep them at ease. He or she can help lessen the tension and direct group energy during storming.

8.4 What "officers" are needed when our group is forming?

Depending on the needs of the group, it can be structured elaborately or very simply. At the very least, a chairperson, a recorder, and a facilitator are needed.


The group leader or chairperson takes charge either as the elected chair or informally as a group member who sets the direction for the group. This person accepts responsibility for the group's output. The group leader's job is the most visible leadership role, but the other roles may also involve leadership.

The leader directs the group's activity during the forming phase. In the storming phase, he or she is more of a coach. During norming, the group leader takes a supporting role, while in performing, he or she delegates responsibilities.

Many groups in their early phases have found that rotates the chairperson position every two to three months is very effective. This prevents one person from getting too much power. A checklist of tasks and the sequence of each task can be custom made for each group. This helps to keep the meeting on a fast track and prevents time-consuming tangents. The chair checklist is also a tool for people who may be insecure about public speaking because it provides useful prompts that help the chairperson be competent and focused. The meeting participants are asked to raise their hands if they have something to say the chair calls on the participants in their turn.


The recorder keeps the minutes and documents the group ideas and decisions. This person serves the group, but needs help to keep accurate records. He or she should use the language of the group. Recorders are recorders, not interpreters. During all group phases, it is the recorder's job to keep an accurate record of group activity and decisions.


The facilitator helps the group thought process of achieving its goals. This person helps focus the group's energies, suggests new approaches and clarifies member roles. There is no "right way" to facilitate. The approach depends on the facilitator's style, the group and the situation. The essential quality though is flexibility.

8.5 Every group has some difficult people; how should they be handled?

The roles above are positive--they help the group achieve its goals. But sometimes members fill other roles that work against progress. They are called "difficult people" roles. You might know they by other names--know-it-alls, bullies, and complainers--people who go far beyond disagreement. The differences that come up when people disagree can lead to better group decisions. But "difficult people" are those who are predictably difficult. Fortunately, most groups have only a few difficult people, and other group members can cope with them. However, sometimes only one difficult person can do a lot of damage in a group.

To deal with difficult people, you can follow two general strategies:

1. Accept their disruptive behavior
2. Plan to take action.

It is better to accept a difficult person's disruptive behavior than to ignore it. Accepting the behavior doesn't mean you agree with it. Focus on the behavior, but acknowledge the person. Remember, he or she has feelings too. It almost may help to develop a detached view of the behavior. Distance gives perspectives.

Resources: Fisher, Roger, and Ury, William; Getting to Yes; Sternweis, Laura, and Wells, Betty; The Ins and Outs and Ups and Downs of Groups; ISU Extension; Wheelan, Susan A.; Group Processes: A Developmental Perspective; Ury, William; Getting Past No;

Chapter 9

How does brainstorming work?

The purpose of brainstorming is to thoroughly assess and evaluate your concept in a group setting.

You begin by defining your goal letting your creative imagination run wild. Very few works of excellence have ever been produced by a single brushstroke. Think big, small, combined, different, old, new, shifted, opportunity, solution, better, back and forth. Suspend your judgement and think freely. There are no bad ideas in the early stages of brainstorming.

Only after coming up with as many ideas as possible do you want to begin to narrow the field. The evaluation phase is the place for critical thinking as you:

  • Realistically consider your skills, interests and experience
  • Identify your income goals and requirements
  • Estimate the time you will need to invest in launching a new business
  • Consider advice gathered from business advisory groups and agencies
  • Review your knowledge of the industry, your eventual competition, and the market
  • Define a clearer picture of the level of need for your initial idea

9.1 What are some examples of how creative and critical thinking differ?

Creative thinking is an exercise in searching for several correct answers. Critical thinking is the process of seeking only one right answer. Both of these methods are key to a successful brainstorming session. Ways of seeing the differences might be:

in addition to
an answer

the answer

9.2 Is there anything I should be looking for when I brainstorm?

Brainstorming is a process that helps you explore different sides of a notion, concept, or a thought as you work toward satisfying your goals. It is not unusual for completely new directions and alternatives to develop during the exercise. Approach the exercise with an open mind. Initial goals to create products sometimes end up as working concepts that provide services. Sole proprietorships may be changed to partnerships or strategic alliances at this point. Strides toward owning a business may turn into steps toward retraining for a new career with an existing employer.

Development is a dynamic process. Don't overlook unexpected returns or previously unconsidered opportunities to prosper that brainstorming might produce.

9.3 Can I effectively brainstorm alone, or will I need to assemble a group?

Brainstorming is frequently a group exercise led by an outside facilitator who understands the process but who has no connection to the disposition of the idea or topic in consideration. If your idea is a result of a group discussion, and if the members of that group will be key to the final development of some finalized version of the idea, then by all means try to include as many as possible. More heads tend to yield more answers. Plus, by brainstorming together, the group will tend be equally informed and committed.

9.4 If I do brainstorm alone, is there anything I can do make it more effective?

The Internet now offers an interesting supplement to any type of brainstorming session. By connecting to the Web via a major search engine, it is now practical to take advantage of the incredible pool of information, opinions, and examples found on the Internet. Brainstorming online follows this process:

1. Access one of the major search engines.

2. Define your goal in terms of keywords for a search.

3. Write down ALL suggestions and ideas that result, no matter how bizarre and incredible they may seem. Remember that the key to a successful brainstorming session is that you remain open to all ideas.

4. Pare down the list of possibilities using the same type of critical reasoning discussed earlier. To take it another step further, you may want to perform additional searches using keywords from your top five possibilities.

9.5 What is the finished product of a successful brainstorming effort?

The preferred product of a brainstorming effort is a basic concept that can be refined into a fully developed business.

A thorough brainstorming effort will have:

  • Clearly defined the issue or question at hand.
  • Identified an assortment of possibilities.
  • Refined the options through critical evaluation.
  • Produced an idea that can be put into action.


Chapter 10

Where can I find examples of how others have successfully organized to turn an idea into a business?

While your business idea may be very similar to others that have been developed, each idea has its own set of particular needs. In order to find exactly what you will need, it may be necessary to combine data from several service and information providers.

Trade organizations, economic development groups, universities, and lending agencies are just a few sources of valid business information. For instance, if you want to start a Value Added Cooperative, the Iowa Institute for Cooperatives has information that provides a step-by-step outline of the cooperative formation process. Producer and Grower Associations, U.S. Department of Agriculture - Rural Development, and the Small Business Development Centers should also be placed on your resource list. University Extension, utilities and the Iowa Department of Agriculture and Land Stewardship should be included too.

Contacting these groups and becoming familiar with staff members and the information and services they provide, will help you select, organize, start, grow, and sustain virtually any business venture.

Chapter 11

Is there any financial or technical assistance available for this part of the process?

Agencies and service providers are continually developing new business assistance programs. In several cases, existing financial and technical assistance initiatives have been changed through legislative or executive actions in order to better serve the present demand.

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