Managing Conflict Between Board and Executive Director

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

The presence of a conflict indicates contradictions within the corporation, the existence of multidirectional interests. In some cases, this is a normal phenomenon inherent in the activities of any organization. Corporate conflicts can arise between different subjects of corporate law, for example between the owners and the management of the company or conflict between board and executive director, etc. A corporate conflict is dangerous not only for its direct participants but also for the company itself.

Corporate conflicts arise over corporate activities and are expressed in various kinds of collision of interests of corporate entities. The contradiction between the subjects of corporate activity can be regarding not only the goals but also the means of achieving 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 case of corporate conflicts, the participants look for ways to resolve them through negotiations to ensure effective protection of both the rights of a shareholder and the business reputation of the company. If it is impossible to resolve corporate conflicts through negotiations, they are resolved strictly by the law.

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:

  • 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.

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