Managing conflicts in the boardroom

Imagine being inside a boardroom when a high-stakes discussion is going on. What would we see? Data being analysed from multiple aspects; points being debated threadbare; issues getting raised; maybe even flared tempers.

How do you as a board member navigate such a situation?

First off, conflict can be useful in board discussions.


Varun Sarin, Co-Founder, Director at PeopleAsset, says, “A homogenous board runs the risk of practicing what is called ‘groupthink’, which typically results in decisions that lack critical evaluations and are focused on minimising conflict. It is essential to avoid sweeping issues under the rug for the sake of maintaining cordial relationships with the CEO and management.”

Therefore, a board with members who value heterogeneity, practice individuality, and come equipped with a spectrum of leadership skills, experience, and networks, ultimately leads to better decision-making and greater business performance, he says.

So how do these conflicts arise and how can they be addressed?

According to Corporate Governance Institute, the sources of these conflicts could arise because of many reasons, including:

• Financials and structure: This relates to the core business of the company and how it is structured to enable that growth
• Changes in strategies such as acquisitions and mergers: Acquiring a company or selling a company/part of a company are long-winded processes and involve a lot of decisions. It often takes time to finalise these due to multiple levels of discussions and due diligence. Any issues arising from these could lead to questions
• Audit recommendations: Sometimes auditors can raise issues and board members may not agree with these views. This can lead to questions and debates
• Director behaviour: Some directors may do or say things that need to be dealt with
• Risk and crisis management: Crises can unfold in dynamic ways and people could have differences of opinion in how to address them
• Board compositions: Some issues arise due to involvement of people who have some conflicts of interest

How should the board members resolve these necessary conflicts:

Skilled negotiation is required with clear understanding of roles and responsibilities, sharp accountability and ability to think through multiple aspects of a problem. It is crucial to have a broader perspective that considers the interests of all stakeholders, including customers, clients, employees, and society at large, rather than solely focusing on shareholders' interests.

In some cases, a written code of conduct could help navigate tricky discussions.

Sarin says that it is important to understand the real role of the board when it comes to such situations. As a board member or director, it's crucial to distinguish between governance and management. It is important to have confidence in advising the organisation on aligning talent, risk management, and strategy with key stakeholders. This requires investing time in understanding the organisation, regularly participating in discussions, and being prepared to address difficult or pressing issues during board meetings.

With corporate governance now an increasing requirement for companies, boards need to be able to both highlight and address these potential points of conflict. And some skills that are getting valued in potential board members include understanding of legal, risk, compliance and government affairs, HR, diversity and inclusion, ESG, and cybersecurity.