Managing Board Conflicts Delivered at the ICPSK Seminar on Conflict Resolution

Transcription

1 Managing Board Conflicts Delivered at the ICPSK Seminar on Conflict Resolution CS Winnie Jumba 15 September 2016

2 Contents What is Conflict Management Areas of Board Conflict Typical Sources of Conflict Most common Topics of Boardroom Disputes Impact of Board room Disputes on Business Conflict management strategies Management techniques

3 What is Conflict management? A conflict is a situation when the 2interests, needs, goals or values of involved parties interfere with one another. Conflict management is the practice of recognising and dealing with disputes in a rational, balanced and effective way. Conflict management implemented within a business environment usually involves effective communication, problem solving abilities and good negotiating skills to restore the focus of the Company s overall goals. (Business Dictionary)

4 Areas of Board Conflict Conflict among Board members Conflict between the organisation and its members or stakeholders Conflict between Board and Staff Conflict among staff members

5 Typical Sources of Conflict Data Conflict Lack of Information, differences in interpretation, divergent perception on importance. Interest Conflict Underlying substantive needs of either self or well being of those being served. Perception that different interests are in competition. Conflict of interest Competition for limited resources Structural Conflict Struggles over power or authority (about unequal control, ownership or distribution of resources) Performance expectations Ambiguous jurisdictions Dependency 9e.g on one party) Value Conflicts Different ideology (core values) Relationship conflicts Poor interpersonal skills resulting in defensive behaviour and stereotypes Communication barriers Lack of cooperation Unresolved prior conflicts Five sources of conflicts by Christopher Moore

6 Most common Topics of Boardroom Disputes Financial, structural or procedural workings of the organisation Personal behaviour and attitudes of directors Strategy development, including mergers and acquisitions Risk appetite and risk management Change and crisis management Audit findings Board process issues, such as structure of meetings, schedules, e.t.c Management oversight Composition of board and senior management Involvement of shareholders/owner s family business 2013 Global Survey results by Centre for Effective Dispute Resolution and International Finance Corporation

7 Impact of Board room Disputes on Business Wasting management time Distracting from core business priorities Reducing trust among board members Affecting the functioning of the board Affecting the efficiency of the organisation Negatively affecting relationships within the organisation Costing the company money Damaging long term business performance/profitability Affecting the reputation of the organisation

8 Conflict management strategies

9 Conflict handling behaviour Competing Collaborating Compromising Avoiding Accommodating High concern for personal goals and low concern for relationships Search for mutually satisfactory solution. High cooperation and low confrontation. A mid way solution; best suited where the parties are relatively equal in power and have mutually independent goals. Delay or ignoring the conflict Search for common ground. High cooperation and low confrontation.

10 Common methods of resolving Board disputes Through internal negotiation Through mediation by a member of the board or management Through a decision made by an internal authority holder By avoiding the conflict and letting it pass Through court action/arbitration Through external mediation Through negotiation by way of external negotiators/advisers

11 Challenges /complicating factors Handling emotions Conflict of stakeholder versus interests of the company Avoidance of the dispute (Esp by the minority shareholders) Competing factions of the Board (independent, executive, NEDs) Issues over status

12 Relevant competencies for Board members Ability to deal with different personalities Ability to give and receive constructive critical feedback Ability to have difficult conversations Communication skills Ability to chair an effective meeting Mediation skills Negotiation skills Awareness of cultural issues Ability to manage politics outside the boardroom

13 Management techniques

14 Preventive measures Data Interest Structural Value Relationship Board induction and continuous training Quality Board packs Structured Board and Board Committee meetings Nominations Committee Draft clear constituting documents (Articles of association and shareholder agreements) Implement policies that manage conflicts and independence (investment policy, dividend policy, e.t.c) Involvement in Strategy development Use expert support on complex transactions/decisions (change management) Clarify roles and responsibilities Negotiate governance agreements Board Charter, Shareholder agreement, e.t.c. Board composition (skill balance, diversity, independent/exec utive mix, e.t.c) Case of family business Skilled Chairperson Open Board culture Ethical culture Code of conduct/ethics Conflict of interest policy Conflict Mgt/Governance training Bonding sessions Feedback Assessment/evalu ation sessions Implement a grievance procedure - e.g TORs for Nominations committee

15 Thank You