Knowing how to resolve conflict is a skill. In a world where everyone has different experiences, skills, and opinions, conflict is unavoidable. The same holds true for boardrooms.
The board has the duty of stimulating the flow of ideas, identifying key issues affecting the business, and making informed decisions. This often calls for deliberation and debates.
However, these positive processes can sometimes turn into boardrooms conflicts. Therefore, company directors need to understand the source of the disagreement and measures to solve them.
If not addressed as soon as possible, the effectiveness of the board and the organisation’s performance will suffer.
Knowing how to resolve conflict is vital if you are to succeed as a board and a leadership team.
Key takeaways of this guide:
- Boardroom conflicts can arise instantly or develop over a long duration of time
- The first step to preventing conflict is clarifying the roles and responsibilities of the board and management
- Another way to tackle disputes in boardrooms is by coming up with a robust code of conduct
- The responsibility of settling disputes falls on the chair
- Each board member needs to understand their roles and responsibilities
- If the chair can’t resolve an issue, an authority from the outside can help
- Director training is required to become an effective board member
What causes boardroom conflicts?
Boardroom conflicts can arise instantly or develop over a long duration of time. There are many potential sources of disputes in boardrooms, and we’ve listed the common ones below.
· The financial and structural process of an organisation
· Fresh developments related to strategies like acquisitions and mergers
· Audit conclusions
· Director’s attitudes and behaviours
· The board’s process, including schedules, meeting structures, and others
· Leadership or board compositions
· Risk and crisis management
· Varying views on organisational goals and strategies
· Unclear role and responsibilities
· Involvement of shareholders’ families in business matters
Have a clear description of the board’s roles and responsibilities
The first step to preventing conflict is clarifying the roles and responsibilities of the board and management. Otherwise, you’re just inviting disputes and impairing the board’s effectiveness.
The organisation’s board needs to develop committee charters, which describe the committee’s authorities and responsibilities.
Management also needs to understand what role it plays and that of the board. This will help prevent board meetings from being consumed by irrelevant matters the management is supposed to handle.
Issues can also arise when the board thinks management should handle a specific area, but the management believes it’s the board’s role.
Create a written code of conduct
Another way to tackle disputes in boardrooms is by coming up with a set of strict rules and values chairpersons and executive directors need to follow. It’s wise to mention the code of conduct during the first period of orientation.
Have a written list of disrespectful behaviours toward others that can cause conflict. You can also include relevant summaries on matters such as privacy, specific interactions, conflict of interest, and business matters.
Apply dispute resolution techniques
The chair can borrow conflict resolution techniques from negotiation and meditation to create the desired friendly environment. The techniques can help encourage discussions, debates, and the free flow of opinions.
While the responsibility of settling disputes falls on the chair, any skilled directors with collaborative conflict management skills can draw on meditation techniques to find common ground. Besides, they can help boards establish orderly decision-making and consensus formation on issues they need to address. In turn, this boosts the board’s performance.
Such peacemakers can negotiate a win-win solution, take perspective, identify and express their interests, and contain strong emotions.
Hold each board member accountable
Each board member needs to understand their roles and responsibilities in the organisation. Even when there’s a code of conduct, the board can still disagree on various matters leading to a conflict. It’s the role of the chair or board leader to ensure each member behaves in a civil manner, whether or not there’s a disagreement.
Besides that, board members should also hold each accountable for following the prescribed rules and guidelines. They should remind each other about meeting protocols. And if there’s tension between members during a meeting, the chair needs to hold a private conversation with the parties. This helps to prevent the tension from spilling over and becoming a dispute.
Find an arbitrator
Ensure the individual you bring has no relationships with conflicting groups to promote total fairness.
If the chair can’t resolve an issue, an authority from the outside can help mediate the conflict. For example, the organisation’s CEO or board chairman can be the mediator.
Alternatively, you can hire a third party to provide counsel to the disagreeing parties.
Conflicts are part and parcel of every boardroom. Disputes are positive and boost the board’s effectiveness and the organisation’s performance.
However, sometimes they might get out of hand, leading to damage and trouble. And if not addressed, the conflict can escalate and undermine the board’s ability to make good decisions.
Mentioned above are some ways to solve conflicts in the boardroom. But don’t depend on them alone.
You can enrol for a Diploma in Corporate Governance. As a result, you will receive the director training you need to become an effective board member.