Conflicts between boards members often take place. In the professional environment, such disputes have to be resolved quickly so that the company does not suffer as a result. Find out how you can do this here.
Conflict management in companies: recognizing and resolving conflicts
Conflict within a corporation signals underlying contradictions and divergent interests, which is a common occurrence in any organizational setting. These conflicts may emerge between different entities governed by corporate law, such as owners versus management or between the board and executive director. It’s important to note that corporate conflicts pose risks not only to the involved parties but also to the overall well-being of the company.
Corporate conflicts stem from various aspects of corporate operations and manifest in clashes of interests among corporate entities. These contradictions may extend beyond just objectives, encompassing the methods employed to achieve them.
The most common examples of corporate conflicts are situations when:
- the management of the company or part of the owners violates the procedures established by law and the charter. He does not notify about the meeting, does not comply with the voting rules, otherwise infringes upon the interests of other owners;
- top managers of the company make decisions, not in its interests, make unprofitable transactions, contribute to the reduction of property or provoke bankruptcy;
- disputes between business owners regarding the payment of dividends or distribution of property;
- the owner of a share in the business behaves in bad faith and harms the company;
- the owners object to the sale or acquisition of a stake in the business.
What to do when board members disagree?
In instances of corporate conflicts, parties seek resolution through negotiations, aiming to safeguard both shareholders’ rights and the company’s business reputation. When negotiations fail to yield a resolution, legal avenues are pursued to address the conflicts.
The prevention and settlement of corporate conflicts in the company equally allow to ensure the observance and protection of the rights of shareholders and to protect the property interests and business reputation of the company.
There are the basic tips on how to deal in case of conflicts between board and executive director or how to apply conflict management correctly:
- Analyze the situation
Determine the difference between what happened and how you or others feel about it. Then think about what is really at stake and what the outcome should be.
- Start with general
It is much easier to come to an agreement on issues on which most of the participants in the discussion agree, and then look for solutions to those points with which you disagree.
- Think one step ahead
When the conflict is over, it is not difficult to reason about it, while being in a difficult situation it is much easier to find a way out of the impasse if you have thought in advance about how to resolve the disagreement.
- If possible, take the lead
Be the first to start a dialogue and don’t stop listening to your opponents, this can be the key to the first steps in resolving a conflict.
- Ask for help
In this sense, conflict can be viewed as a trigger that helps boards of directors achieve better results in their activities, and conflict intervention can be viewed as a tool for effective corporate governance.