As a litigator, I see more than my fair share of other people’s conflicts, including many in the boardroom. Conflict is often seen as part and parcel of how we do things – in our courts, disputes are examined and judged under the adversarial system; in our business and private lives, we are often involved in situations where diametrically opposing positions are taken and fought over until one “winner” emerges. It is win/lose, black/white.
But win/lose bust-ups of this kind are rarely productive for any of the parties, or those associated with them. Whilst board members bicker, your business may lose its direction, or significant turnover, or lose control of costs. Individuals’ performance may fall off, they may not be able to contribute to the business as it requires because of the strain they are feeling and indeed that stress may reverberate more widely and affect their home life for example. The business may incur costs, including lawyers’ fees, which could have been avoided. Morale will be low.
Any sensible business would want to avoid this scenario. So what can be done? In my experience, even a few simple steps can make a valuable difference. I look at the issue of conflict within businesses in three stages:
- conflict avoidance
- planning to deal with conflicts which arise; and
- actually dealing with a conflict.
At some level, in every board there will be some common agreement or understanding. It is important to identify this – it may be a strategic objective or year end targets. If all directors can agree “We want to get to is £Xm turnover” or “We want to open two new outlets by a certain date”, then contentious issues can be addressed within a positive context: how will doing Y help us achieve the agreed common target? Be specific. An agreement that “this business needs to be more efficient” may be too nebulous to use as a positive context for difficult discussions. Aim to have a clearer definition such as “we want to grow the top line by 15% in the next two years”.
If director A then wants to invest in product development and director B disagrees, each can be asked to talk about how their proposals can help achieve the objective. This depersonalises the process with analysis and criticism being expressed in the context of an agreed, shared objective.
Reach clear agreements when a business is established, or when new directors or (in the case of SMEs) shareholders join. Where the directors are also shareholders, lack of clarity or understanding about rights and obligations, or processes frequently enables conflicts to develop. A professionally drafted shareholders’ agreement is one of the best possible starts. Consider at the outset, and regularly before differences arise, issues which may give rise to conflict. The process of sitting down, to consider in advance how certain issues will be dealt with in itself can highlight differences in assumptions or understanding and enable them to be addressed while relationships are good.
Planning to Deal with Conflicts which Arise
TIP 3 – don’t allow unexpressed grievances to turn into conflicts which lead to bust-ups
Acknowledge that people will not always agree and create a culture and set out a strategy to embrace the positive aspects of disagreement (conflict can be an impetus for change or improvement in some area of the business) before disagreements become destructive. Some organisations have formal internal conflict resolution processes, though a culture of openness and collaboration would mean formal routes would rarely have to be followed. A small investment in training around conflict management can go a long way towards instilling positive behaviour in a board and throughout any organisation.
TIP 4 – don’t rush to court
It is not always possible to avoid conflict; how it is managed makes all the difference. I often see conflicts which have worsened and taken on a life of their own, often to the dismay of all involved, following a sometimes knee-jerk reaction to “go legal”. Whilst there can be circumstances where resolution through the courts is necessary, legal proceedings should rarely be the first port of call.
TIP 5 – mediate!
In the vast majority of conflict situations I have found that using the services of a mediator is by far the most effective approach. In many cases the process can have a transformative effect on relationships and a business. Consider involving a mediator as soon as face to face discussion shows signs of becoming difficult. A skilled mediator will create a safe environment in which participants can identify their true underlying interests, their “bigger picture” and their desired outcomes and will enable them to move away from black and white positions which may well be both self-destructive and a barrier to resolution of issues between the parties, enabling them to reach a “win-win” resolution.