An effective board seeks to stimulate the flow of ideas, identify key issues, consider alternatives and make informed decisions. To do so requires often-vigorous debate, which can sometimes turn into conflict, but there are many more reasons for issues to arise. Such disputes must be dealt with as soon as possible, since if left unresolved, they can undermine the board’s effectiveness and the organisation’s performance.
Most organisations will have policies and procedures to deal with complaints or grievances by customers, staff and the public, there is often a reluctance to deal with conflicts in the boardroom.
Such conflicts include those:
- Between directors;
- By a director regarding a board policy, process or procedure; and
- By a director regarding a resolution of the board.
Tension is not necessarily harmful, defining it as “disagreement that is often uncomfortable, but which can be resolved by healthy debate.” Conflict, on the other hand, is “aggressive tension that escalates to an extreme and unresolvable level.” While tensions are a positive – and indeed necessary – force for all effective boards, conflict tends to be detrimental.
Be emotionally aware
Boardroom conflict manifests itself in a number of different ways: passive aggression, emotional responses, repetition, overtly interrogative questioning and physical behaviours such as leaving the room, slamming doors and even resigning. Tension shows itself as robust debate, open exchange of information, discussion of difficult issues, diverse perspectives, questioning and engagement.
Broadly speaking, there are two types of tension: cognitive and emotional. Cognitive tension can occur during discussions about how to improve results, for instance, and may lead to constructive conversations and solutions. Emotional tension tends to focus on personal differences or performance problems, resulting in conflict when the possibility of constructive dialogue vanishes.
An example of a conversation involving cognitive tension would be: “I don’t think that’s the best way to achieve our goal. Can you think of alternatives?” By contrast, one involving emotional tension would sound more like: “That’s a bad idea – you haven’t understood anything. Your proposals always lead us to failure.”
Two principles of emotional intelligence can help to address the latter type of conflict: the first is to recognise that emotions lie behind some disagreements; the second is to understand their impact on board members’ thoughts and actions. Once that awareness is there, further steps can be taken.
Use corporate governance to set ground rules
Good corporate governance practices are intended to increase the value of company, facilitate access to capital and contribute to its continuity.
Poor governance can be an issue in many emerging markets that worries investors. In many businesses a lot of the conversations take place outside the boardroom, over dinner or lunch. But we are seeing more and more companies, particularly larger ones, wanting to know more about corporate governance. Some now have very good practices in place.
Having a formal shareholder agreement that sets out rules covering how the business is run, including key issues such as succession-planning, can help to prevent boardroom infighting and protect business value.
Nip conflicts in the bud
While a good board is one with ‘managed’ tension, a dysfunctional board allows unresolved tension to fester and escalate into conflict situations. Various triggers exist, such as underperformance and the manner in which board members address one another. What is more, tension can transform into conflict quickly. The tipping point is almost always the result of a situation becoming emotionally charged.
Direct, interrogative and aggressive styles of questioning are often recognised as triggers for conflict. Similarly, concerns which are not listened to, or are not heard, often plant the seeds of future conflict. It is, therefore, important to deal with potential conflicts rapidly to avoid an irreparable breakdown of trust and loss of respect.
Disagreements should be openly discussed. Robust debate, open dialogue and tackling uncomfortable issues head-on explicitly benefit boards’ decision-making and actions. However, the research findings challenge the fundamental assumption that conflicts should always be aired, discussed and addressed in the boardroom.
In general, strategy and decision issues are more appropriately resolved inside the boardroom. Techniques for managing tension and minimising conflict include:
- Explicitly acknowledging concerns during board meetings
- Face-to-face conversations
- Depersonalising tension by reminding board members of their ‘higher purpose’.
Conflict, on the other hand, is most effectively resolved in informal dyadic meetings outside the boardroom. One way for the CEO resolve these tensions is to hold short one-to-one briefings with each board member before meetings to get a better idea of their main concerns. In this way, issues that have the potential to stir up strong emotions can be identified and managed before they escalate into boardroom conflict.
Ultimately the best decisions are reached when there is a transparent exchange of information, when concerns are fully aired and multiple, sometimes conflicting, perspectives are offered. Often boards need someone who can draw together all the disparate strengths of board members to facilitate effective teamwork.
Put plans in place
The open and honest exchange of views – even where there is disagreement – is the sign of a healthy board. Disruptive conflict is most likely to occur when disagreements are left unaddressed and unresolved. This can also be the case where directors’ disagreements become personal, making it harder for them to find any middle ground. The financial impact of such discord is often significant for the company and exhausting for all concerned. It can cause an irreversible breakdown of boardroom relationships and reduce the value of the business.
Those leaders who seek to build their business on strong governance foundations, improve diversity, take expert guidance and support open dialogue at all levels are more likely to prevent the most damaging bust-ups.