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Conflict prevention and resolution - Coggle Diagram
Conflict prevention and resolution
Boards should plan for conflict because once it arises it can have considerable impact on the company in terms of time spent resolving it, possible financial impact and also reputational impact.
Conflicts can arise between
The shareholders and the company/board
The board and the CEO/senior management team
Different board directors
Board/senior management and the employees
Company/board and external stakeholders
The types of conflicts vary depending on the group involved. For each type of conflict, a different resolution may be required
Boards should recognise what disputes are likely to arise and exercise the duty of care when dealing with situations which may result in a dispute. They should understand the risks posed by the dispute and if it crystallises be prepared to resolve the dispute as quickly and effectively as possible. This means that the board should
Plan ahead by anticipating potential disputes. These can be identified by assessing past and current disputes of the company and also other organisations involved in the same activities
Ensure that the company's policies, procedure, legal documents, such as articles of association and disclosures are aimed minimising the risk of conflict and include provisions to deal with conflict where it arises
Ensure that there is evidence that the company's policies, procedures etc are actually integrated into the company's culture and not just documents on shelves
Identify a person to manage the dispute resolution process, this could be the company secretary or the company lawyers
Review the effectiveness of the dispute resolution process following any dispute
Be prepared for mediation and as a backstop litigation to resolve conflicts
One area where conflict can occur is in the boardroom itself. The CS can take the following steps to minimise boardroom disputes
Ensure that the roles of the board members have been out in a clear and concise way in their appointment letter
On appointment a comprehensive induction programme should be held to ensure that there is no misunderstanding as to what is expected from the board members
There is a board charter/governance manual setting out what the roles of the board, board committee and senior management team are
Delegtion of authority to the CEO is clearly documented
Proper flows of information to and from the board. The board requires sufficient information to make informed decisions. Management require prompt communication of board decisions
In agenda develpment, ensuring that there is plenty of time allowed for discussion, debate and deliberation of the matters brought to the board
Adviisng the chair to agree with the board ground rules for behaviour, attire and so on during board meetings
Creating the right environment within the boardroom for calm, effective meetings and decision making. This can include
Shape of the table - everyone being in eye contact with the chair
Seating arrangements - NEDs on one side, executives on the other is like drawing battle lines. Mix them up so it is more like a team
Lighting, heating space etc can all affect human behaviour
Make sure there are plenty of breaks - 2 hours should be maximum time without a break. Stepping out of the boardroom can give new insights and perspectives as people have time to think
Being prepared to break a tense situation by advising the chair to take a break, asking for clarity for the minutes and so on
Encouraging the creation of a good culture within the board. This can be achieved by building relationships and trust between board members. Giving plenty of opportunity for board members to get to know each other through lunches or dinners, annual board retreats or board training
Evidence that a company has done everything possible to plan for and resolve a conflict can help should a regulatory breach or litigation occur.