(FORTUNE Magazine) – It's Monday, 11 A.M., and I'm in the boss' office thinking I'm finally going to get that long-awaited promotion. "I want to tell you that we think you have great potential," she says with a stern face. "But you really need to do something about your style." My mind races as I try to figure out what she could possibly mean. I make a mental note never to trust people who start conversations with compliments. "Well...ah...it's nice to know that I'm appreciated," I stammer, stomach churning. "But I have to be honest. I don't know what you're talking about." She leans forward and says, "You need to dress more conservatively." Apparently I've been coming to work looking like Erin Brockovich, and that's considered inappropriate for a manager. I don't know whether to laugh or scream, and I briefly toy with the idea of simply storming out of her office. This can't be happening.

It isn't.

My "boss" isn't really a boss at all. She designs exhibits for a science museum. Surrounding us in the lobby of the Marriott hotel in Cambridge, Mass., are 120 other people having similar conversations. We're all here for a two-day seminar on Managing the Difficult Business Conversation, and if the subject sounds overly touchie-feelie, like a grown-up version of Barney, stop smirking. The seminar is run by Harvard Law School's Program on Negotiation, an applied-research center that studies dispute resolution around the world.

"Conflict is a growth industry," says Bruce Patton, an associate director of the Program on Negotiation who worked with the U.S. and Iranian governments to end the hostage crisis in 1980. "Most companies aim to minimize it, but the best companies learn to harness it to spur creativity." In fact, difficult conversations are increasingly common these days, as companies move to flattened management structures and the economy grinds through a painful slowdown. If you run a small business, chances are you're on one end of just about every difficult conversation that takes place--plus all those that don't take place but should.

Communication may be a crucial part of every CEO's job, but there are precious few courses that focus exclusively on teaching executives the skills they need to be effective. Non-degree education programs are proliferating, giving entrepreneurs a dizzying number of subjects to choose from, but only recently have they started teaching such topics as Improving Your Listening Skills and Managing Anger at Work (both available at HighTechCampus.com).

The 120 attendees of this class are from small businesses and from giant corporations like Procter & Gamble, McDonald's, Pfizer, and Bayer. For Paige Ireland of Canal Bridge Consulting, a private company in Bethesda, Md., with 16 employees, just getting into the course elicited an uncomfortable exchange. She found a flier on her desk one morning with the word "Interested?" scribbled on it by her boss. "Is there something you're trying to tell me?" she asked. Fortunately, he laughed it off. One CEO, Pablo Figueroa, flew in from Puerto Rico to attend, leaving his No. 2 in charge of the architectural design firm he founded 14 years ago. Even two people from the IRS showed up--one, appropriately enough, from the audit department.

Most attendees brought along a specific problem they hoped to resolve. "How do I tell employees that their bonus is going to be much smaller than expected?" asked one woman. Another wanted tips on how to soften a customer's expectations when you know there's no chance you can meet them.

Admittedly, some of the course materials were written in language you might find in a marriage-counseling manual. The second morning, for example, we covered Managing Your Feelings and Getting Straight on Purposes, or how to get what you want from employees without letting emotions overwhelm the discussion. However, we picked up some concrete guidance as well. One of the first rules: Erase the word "but" from your vocabulary and replace it with "and." (As in, "I understand how you could feel that way, and...") According to the instructors, saying "but" creates an either/or situation, which can put subordinate employees on the defensive.

As elementary as instructions like these sound, they're surprisingly difficult to put into practice, even in role-playing situations. Though I'd never met the woman playing my boss, I still somehow resented her for taking issue with my hypothetical attire. (For the record, I don't dress all that much like Erin Brockovich.) At the cocktail reception that evening, I learned I wasn't alone in my feelings. A number of people--mainly women, who made up about 40% of the attendees--were still stewing from the conversations they'd had that morning. One, a portfolio manager at a small New York bank, grew flustered when she realized that her partner wasn't merely acting the part of a mean boss but actually was one. "I'm bad at role-playing, so I'm just going to be myself," he told her before lashing out. (Translation: I'm going to be a jerk.) We decided that he must have been sent by his company for mandatory sensitivity training. Another woman's partner actually called her a slut. So much for "getting straight on purposes."

The next morning, we discussed the "F" word (feelings, that is) and learned that feelings are the biggest factor preventing people from having difficult conversations at work. They're certainly what stopped me from reconciling with my "boss"--we politely avoided each other for the rest of the seminar. "People assume that you check your feelings at the door when you go to work," says Sheila Heen, a Harvard Law School lecturer who has worked with corporations and helped the Citadel military college in South Carolina go coed.

During the discussion on feelings, one small-business owner said he often became overwhelmed at work but was reluctant to tell employees for fear they'd lose faith in him. A woman who heads an education company said she didn't voice her feelings because she didn't want to be considered too emotional. Others said being candid about your feelings at work can have negative repercussions.

The professors didn't have sure-fire solutions for any of these issues. They offered us some Zen-like advice--for example, learn to recognize the difference between "expressing emotions" and "being emotional"--and they listed the five things you should never say when someone is upset: "Calm down"; "What did you expect?"; "It's not so bad"; "What you need to understand is..."; and "I see your point, but..." (there's that "but" again). Then they showed us how to map out both our feelings and what we think the other person might be feeling. Don't assume the worst about things you don't know, they cautioned. If you feel you don't have enough information, try bouncing your thoughts off a co-worker.

This all sounded very warm and fuzzy to me, but--er, I mean and--I gave it a try in my second role-playing exercise that afternoon. In that scenario, I work at a dysfunctional family business that sells mountaineering equipment, founded by a patriarch who has recently died. There's a control-freak sister, a scheming uncle, and me, the irresponsible younger brother who's trying to turn his life around (and is just back from climbing Mount Kilimanjaro). But this time I get to hurl the bombshell. I start off the conversation by saying--in my best bratty little-brother voice, of course--"Uncle Ollie says you're going to let me go; is that true? I can't believe you'd do this to me!" My sister's face goes white, and she begins desperately skimming through her handout, looking for a clue to why I would say this. "I don't know what you're talking about," she stammers. "We, uh, do have some concerns."

Surprisingly, I didn't get as angry this time. Neither did my partner. We slogged through the conversation and, afterward, read each other's handouts and realized that the professors had given us two different stories. Uncle Ollie was playing Machiavelli--instigating a confrontation between my sister and me in an attempt to get her to do his bidding. (No dice, Uncle Ollie.)

Back in our seats, we talked about making the toughest decision of all: whether a situation even warrants a difficult conversation. The short answer: only if there's a compelling business need and you have a constructive purpose. (Telling somebody they're an idiot and wrong doesn't cut it.) Whatever you decide, it won't be easy. "The first time you try to use this stuff, assume it won't go well," cautioned Douglas Stone, a Harvard Law School lecturer who has worked as a consultant in Cyprus helping leaders from Greece and Turkey communicate. "If you do it every day, though, you'll get better at it."

So the next time you get a call from the IRS and hear something strange like "I imagine how awful you must feel, and I'm terribly sorry for any inconvenience this may cause. You're being audited," don't take it so hard. At least you'll know somebody is trying.

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