IFC Corporate Governance Knowledge Publication Conflicts in the Boardroom Survey Results and Analysis © Copyright 2014. All rights reserved. International Finance Corporation 2121 Pennsylvania Avenue, NW, Washington, DC 20433 Centre for Effective Dispute resolution International Dispute Resolution Centre 70 Fleet Street London EC4Y 1EU The findings, interpretations, and conclusions expressed in this publication should not be attributed in any manner to the International Finance Corporation (IFC) and/or to the Centre for Effective Dispute resolution (CEDR) and their affiliated organizations, or to members of their boards of directors or the countries they represent. IFC and CEDR do not guarantee the accuracy of the data included in this publication and accept no responsibility for any consequence of their use. The material in this work is protected by copyright. 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For permission to photocopy or reprint, please send a request with complete information to: International Finance Corporation c/o the World Bank Permissions Desk Office of the Publisher 1818 H Street, NW Washington, DC, 20433 All queries on rights and licenses including subsidiary rights should be addressed to: International Finance Corporation c/o Office of the Publisher World Bank 1818 H Street, NW Washington DC, 20433 Or, fax (202) 522-2422 Conflicts in the Boardroom Survey Results and Analysis Table of Contents Introduction.....................................................................................................................................2 Key Findings.....................................................................................................................................3 About the Survey Participants...........................................................................................................3 Boardrooms in Conflict ....................................................................................................................5 Impact of Disputes...........................................................................................................................5 Attempts to Resolve the Dispute ......................................................................................................6 When Disputes Cannot Be Resolved.................................................................................................7 The Difficulty of Dealing with Personal Factors..................................................................................8 The Training that Directors Want versus the Training Already Received..............................................9 A Gender Difference?.....................................................................................................................10 Impact of Enterprise Size on Resolving Conflict...............................................................................12 Conclusion.....................................................................................................................................13 Conflicts in the Boardroom Survey 1 Introduction In the boardroom, disagreements are often unavoidable — especially when the board is composed of independent- minded, skilled, and outspoken directors. This is not a bad thing. There should be a debate in the boardroom, and decisions should result from a process in which directors consider all reasonably available information. A board that never argues or disagrees is most likely to be an inactive, passive, or inattentive board — in other words, an ineffective board that is neither fulfilling its oversight function nor carrying out its duty of care. Yet, if boardroom disagreements and/or shareholder in late 2013 of 191 directors and board members (including conflicts are not dealt with properly, they can devolve IFC Nominee Directors and members of the Private Sector into acrimonious disputes that undermine a company’s Advisory Group) to find out about their experiences with operation and performance. Left unchecked and and attitudes towards boardroom disputes. unattended, these disputes escalate quickly into public matters that can have severe, long-term consequences for Corporate governance disputes involve corporate the company and its key stakeholders. These disputes can authority and its exercise and involve the board’s lead to poor performance, scare investors, produce waste, powers and actions — or its failure or refusal to act. divert resources, cause share values to decline, and, in These conflicts may arise between the board and some cases, paralyze a company. its shareholders or between directors and executive In 2012, the Centre for Effective Dispute Resolution management. They may also concern issues among (CEDR) and the Corporate Governance Group of the the directors themselves or between the board and International Finance Corporation (IFC) undertook a other stakeholders. A governance dispute implicates joint project to explore the causes, nature and methods of the board in one way or another, as a party or as resolving corporate governance disputes. As part of this an active participant, and requires the directors’ ongoing project, CEDR and IFC carried out a global survey engagement to resolve the conflict. About IFC Corporate Governance Group The Group brings together staff from investment support and advisory operations into a single, global team. This unified team advises on all aspects of corporate governance and offers targeted client services in areas such as increasing board effectiveness, improving the control environment, and family businesses governance. The Group also helps support corporate governance improvements and reform efforts in emerging markets and developing countries, while leveraging and integrating knowledge tools, expertise, and networks at the global and regional levels. The Group’s Corporate Governance Dispute Resolution program aims to equip board directors with knowledge, skills and tools to manage and resolve CG disputes and difficult conversations on the board. Purpose: (i) To reduce the negative impact of disputes on the company’s reputation and performance; (ii) To improve the quality and effectiveness of board deliberations. The program brings together CG and ADR specialists to develop knowledge and training products, and guide their implementation. www.ifc.org/corporategovernance About Centre for Effective Dispute Resolution CEDR is a not-for-profit body, founded in 1990, that campaigns for better resolution of disputes and management of conflicts. CEDR’s innovative initiatives promote awareness of the need for more effective leadership in collaboration and dialogue and how to achieve it. CEDR is Europe’s largest independent Alternative Dispute Resolution service, which to date has helped over 40,000 parties in commercial disputes. CEDR is the leading negotiation and conflict management trainer internationally acclaimed for its Mediator Skills Training of over 9,000 mediators. It also consults globally on Civil Justice reform and helps business develop conflict management systems. www.cedr.com 2 Conflicts in the Boardroom Survey Key Findings Our results show the significant effects that boardroom disputes can have on an organization — and the challenges that individual members of those boards encounter in attempting to resolve a dispute at this level. The following are some specific findings from the survey: W  e found that 29.6 percent of respondents had percent). Boards are very reluctant to resort to litigation experience with a boardroom dispute affecting the to resolve such disputes (3.1 percent). survival of an organization. A  significant proportion of respondents (67.2 percent)  e most common subject matter of board disputes Th report that they have encountered unresolved issues. is “financial, structural, or procedural workings of 24.1 percent of small-enterprise respondents report the organization,” closely followed by the “personal that issues are frequently not resolved, whereas only behavior and attitudes of directors.” 5.9 percent of those from medium enterprises and espondents stated that the most difficult factors R 15.6 percent from large enterprises report frequently in resolving board disputes were issues related to unresolved issues. competing factions on the board — “handling the R  espondents are extremely interested in having emotions of those involved and separating personal training for dealing with personal factors: 74.8 percent from business interest.” described training in the “ability to deal with different  hile 47.8 percent of respondents attempt to mediate W personalities” as very useful. board disputes, 34.3 percent admit to frequently being  gender difference emerged regarding the kinds A an active party in the dispute, and a further 25.3 percent of skills desired: women are far more interested in of respondents frequently take a side of an active party. receiving training in negotiation skills, and men are B  oard members are much more confident that they more interested in training on how to deal with different can resolve an internal board dispute (58.5 percent felt personalities. able to resolve these most of the time) than an external dispute involving the board and external stakeholders (just 24.3 percent felt capable of resolving this kind of 29.6 percent of respondents had experience of dispute). a boardroom dispute affecting the survival of an D  isputes are most commonly resolved through internal organization negotiation (61.2 percent) or internal mediation (25.2 About the Survey Participants In October and November 2013, we conducted an online survey of 191 members of corporate boards across the world. Our respondents were experienced board members, with the greatest number (43 percent) having more than 10 years’ experience serving on boards. (See Figure 1 on page 4) Within their organizations, our respondents were most frequently independent directors (26.2 percent) or non- Table 1: Roles of Respondents in their executive directors (22.7 percent), though we had a Organizations significant percentage of respondents who had other positions, such as board chair or chief executive officer of Independent Director 26.2% their organization. (See Table 1.) Non-Executive Director 22.7% Respondents represented a full range of organization types, Management 18.0% the most common being a private non-family company Executive Director 12.8% (26.8 percent) or listed company (22.4 percent). They covered a wide range of sectors, particularly finance and Board Chair 12.2% banking (28.8 percent), education (11.5 percent), energy CEO 8.1% (7.9 percent), public sector (5.8 percent), and insurance (5.2 percent). Conflicts in the Boardroom Survey 3 Figure 1: Length of Time Respondents Figure 2: Size of Respondents’ Organizations Served as a Corporate Board Member 0–3 years Small 21% Enterprise 24.3% Over Large 10 years Enterprise 43% 49.7% Medium 3–10 years Enterprise 36% 25.9% Survey respondents were from organizations of different proportion of respondents were from Sub-Saharan Africa, sizes: 49.7 percent from large enterprises (over 300 but there were also respondents from all other major areas, employees and total assets over $15 million); 25.9 percent including a significant proportion of respondents from from medium enterprises (50–300 employees and total non-developing countries.2 assets of $3 million to $15 million); and 24.3 percent from small enterprises (up to 50 employees and total assets Regarding personal factors, 73.6 percent of respondents under $3 Million). (See Figure 2.) were male, and 26.4 percent were female; 54.1 percent were over 50 years old, 27.6 percent were 40–50 years old, We also had a global response, with respondents based in a 11.0 percent were 30–39 years old, and 7.2 percent were wide range of countries. As shown in Figure 3, the largest under 30 years old. Figure 3: Countries of Respondents’ Organizations Non-Developing East Asia and Pacific Countries (such as 10.9% U.S.A., Canada, 17.4% France) 13.0% Europe and Central Asia Global 8.7% Latin America and South Asia 7.6% 13.0% the Caribbean 8.7% Middle East and 20.7% Sub-Saharan Africa North Africa 2 Country designations are based on World Bank groupings, available at http://data.worldbank.org/about/country-classifications/country-and-lending-groups. 4 Conflicts in the Boardroom Survey Boardrooms in Conflict All boardrooms have disputes, which not surprisingly cover a wide range of topics. Our survey found that the most frequent subjects of disputes were (in descending order of frequency) 1) the financial, structural, or procedural workings of the organization; 2) the personal behavior and attitudes of directors; and 3) strategy development, including mergers and acquisitions. (See Table 2.) Table 2: Most Common Topics of Boardroom Disputes Financial, structural, or procedural workings of the organization 40.3%* Personal behavior and attitudes of directors 38.4% Strategy development, including mergers and acquisitions 37.2% Risk appetite and risk management 31.3% Change and crisis management 30.6% Audit findings 29.9% Board process issues, such as structure of meetings, schedules, etc. 29.4% Management oversight 28.4% Composition of board and senior management 24.7% Involvement of shareholder/owner’s family in business 21.7% *Percentage stating the item was a “frequent” or “very frequent” topic of dispute. Impact of Disputes In themselves, disputes are not necessarily a problem for a board; it is when they are mismanaged or become insurmountable that the problem occurs. Considering the impact of these disputes on business priorities (see Table 3), it is important for organizations to tackle them effectively, to ensure that the negative outcomes are minimized. Table 3: Impact of Boardroom Disputes on Business Wasting management time 49.3%* Distracting from core business priorities 44.9% Reducing trust among board members 42.8% Affecting the functioning of the board 42.1% Affecting the efficiency of the organization 38.3% Negatively affecting relationships within the organization 32.4% Costing the company money 29.5% Damaging long-term business performance/profitability 26.8% Affecting the reputation of the organization 23.7% *Percentage stating the item had a “significant” or “very significant” impact. Conflicts in the Boardroom Survey 5 Attempts to Resolve the Dispute Regarding the roles that those surveyed have taken when disputes have arisen on the board, we received a mixture of responses. For example, 47.8 percent of respondents stated that stance that is either openly on one side of the dispute or is when they encountered board disputes, they commonly noncombative (a fight-or-flight response). attempted to mediate the dispute; 34.3 percent admitted The significance of the positions people adopt in that they were frequently or very frequently an active relation to conflict can be seen in their choice of how party to the dispute; 25.3 percent said they commonly to deal with it. The most common mechanisms for are not the active party, but take side in the dispute; and resolving a dispute remained internal to the board (see 26.5 percent of respondents reported that they frequently Table 4). Therefore, as the table suggests, it is important or very frequently were neutral in a dispute.3 These figures for board members to be trained in, maintain, and apply show that, although board members may think they skills in mediation and negotiation — the most common would try to resolve a dispute, in reality a small majority methods of resolving disputes. generally do not adopt this position; rather they take a Table 4: Most Common Methods of Resolving Board Disputes Through internal negotiation 61.2%* Through mediation by a member of the board or management 25.2% Through a decision made by an internal authority holder 19.7% The issue is not resolved 15.6% By avoiding the conflict and letting it pass 11.0% Through court action/arbitration 3.1% Through external mediation 2.3% Through negotiation by way of external negotiators/advisers 2.3% *Percentage of respondents describing this method of resolution as occurring frequently. Extremely few respondents indicated a willingness to the time, compared to just 24.3 percent of respondents resort to court action (indeed, 79.7 percent said they never for disputes between the board and external stakeholders. resolved their boardroom disputes in this way). We also Similarly, a majority of respondents (57.9 percent) felt found that the more internal the dispute is the more willing confident resolving board-management disputes most or respondents are to resolve it: 58.5 percent of respondents all of the time, and 31.6 percent felt confident resolving were happy to resolve intra-board disputes most or all of board-shareholder disputes. 3 Respondents could select multiple options in answering this question; so the responses total more than 100 percent. 6 Conflicts in the Boardroom Survey When Disputes Cannot Be Resolved A significant percentage (15.6 percent) of respondents reported that their boardroom disputes frequently are not resolved. And 67.2 percent said they have some experience of unresolved issues. More strikingly, 29.6 percent of our survey respondents indicated that they had experienced a boardroom dispute that affected the survival of an organization they had been involved with. Of those who reported such disputes, 63.6 percent cited personal issues connected with the dispute as being a major factor in the organization’s demise. (See some of their comments below.) There are many [issues], but they all boil down to personality “ crisis. Most of the people I have been on boards with feel overqualified and find it difficult to accept views of other members.” In the first board meeting with a new board which was less friendly “ to him, [the CEO] quit and put several million dollars in his pocket.” . . .The chairman insisted on his idea of an IPO, and the “ organization collapsed.” The current conflict over succession planning for the founder/chair/ “ CEO of the NGO is threatening the survival of the organization. A pattern of conflict avoidance on the part of the chair/CEO, a stagnant flow of information, and the board’s passivity make it hard to discuss next steps.” Personal behavior and attitudes of directors. The CEO’s “ abrasive style, with zero appetite for “changes,” has pushed the company to a stage wherein the company is under attack from the stakeholders, including the creditors.” In one board, there was a significant difference of opinion between “ the chairman-CEO and the board about the way he had treated relations with personnel. That might have paralyzed the company. The board obliged the CEO to quit.” If we [the board members] are not going to act as per their “ instructions, our job security will be questionable. Generally speaking, we are hostages.” Conflicts in the Boardroom Survey 7 The Difficulty of Dealing with Personal Factors Complicating factors in the way a dispute is presented frequently become as important as the subject matter of the dispute itself. These factors can make handling a dispute more difficult (see Table 5). Table 5: Frequency and Difficulty of Complicating Factors Which complicating factors do respondents encounter most frequently? Issues regarding handling the emotions of those involved in the dispute 29.4%* Conflict of personal or family interests versus interests of the company 26.6% Avoidance of the dispute/conflict from those affected 26.4% Issues over status 25.3% Issues over competing factions on the board 23.5% What complicating factor do respondents find the most difficult to manage? Issues over competing factions on the board 52.5% Issues regarding handling the emotions of those involved in the dispute 49.6% Conflict of personal or family interests versus interests of the company 49.2% Issues over status 41.2% Avoidance of the dispute/conflict from those affected 37.8%  ercentage of respondents describing the complicating factor as encountered “frequently” or “very frequently” and the dispute as *P “difficult” or “very difficult” to manage, respectively. Our responding board members found that the personal board disputes, making it the most frequently encountered issues listed in Table 5 were both difficult and frequent factor. Handling the emotions of those involved requires complicating factors in disputes. They indicated that the many of the same skills as dealing with competing factions; most difficult factor was “issues over competing factions on both entail recognizing the need and working with the the boards,” with 52.5 percent describing it as “difficult” affected parties rather than avoiding the issue. or “very difficult,” although it occurred less frequently. Other complicating factors seen as both prevalent and In practice, the concept of “competing factions” is difficult to deal with also reflect the challenge of working likely to involve the many different types of directors with the human side of the dispute. For example, handling (independent, executive, non-executive), each type with “conflicts of personal/family interests versus interests of its own particular interests. There may also be competing the company” was the second-most frequent complicating factions between management and the board. factor (with 26.6 percent reporting that it occurred In handling disputes arising from competing factions, it is frequently or very frequently) and the third-most difficult important to deal sensitively with the people involved. It factor to deal (with 49.2 percent describing it as “difficult” can be helpful to consider some of the methods mentioned or “very difficult”). below, in particular the “soft skills,” such as the ability to The third-most frequent (26.4 percent) factor was “avoidance understand and work with the personalities of those involved. of the dispute/conflict from those affected,” although it came This difficulty of competing factions is closely connected in fifth in difficulty (37.8 percent). On its own, avoidance to the second-most difficult complicating factor: handling of a dispute is rarely an effective strategy and can be a the emotions of those involved in the dispute. Nearly half crippling factor for a board that fails to tackle the conflict (49.6 percent) of respondents found handling emotions to be appropriately. Ignoring a problem rather than ameliorating it difficult. And 29.4 percent said they encountered this issue in often just exacerbates it. (See the comment below.) In my experience the avoidance of the dispute is the biggest problem, especially in a company with a “ dominant shareholder and two minority shareholders, where the minority shareholders are suffering most from results of avoidance but are hardly part of the conflict management, as the conflict is played outside the board/board meetings” 8 Conflicts in the Boardroom Survey The Training that Directors Want versus the Training Already Received Given these trends, it is not a surprise that the training that board members now want is in how to deal with these personal issues and handle the human being behind the dispute. Overall, the most requested training was for the “ability to deal with different personalities” (74.8 percent described it as “very useful”), the “ability to give and receive constructive feedback” (73.0 percent described it as “very useful”), and the “ability to have difficult conversations” (70.1 percent described it as very useful). (See Table 6.) Table 6: Skills Training that Board Members Want Ability to deal with different personalities 74.8%* Ability to give and receive constructive critical feedback 73.0% Ability to have difficult conversations 70.1% Communication skills 69.5% Ability to chair an effective meeting 68.3% Mediation skills 65.1% Negotiation skills 64.0% Ability to deal with volatile personalities 61.4% Awareness of cultural issues 54.3% Ability to manage politics outside the boardroom 52.0% *Percentage describing skills training as “very useful.” The following comments from our respondents reflect this need for increased training in tackling personal issues, such as emotional intelligence, diversity, and leadership. A greater awareness of the role that emotional intelligence plays in “ relationships and decision making would be helpful. Our chairman/CEO is all too willing to bury succession planning by reducing the number of board meetings held annually, creating impossibly long agendas, and dominating discussions. The board members admire and respect his work but are too timid and seem unable to help him see that if the NGO is to survive and his legacy remain intact, it is time to find a new leader.” I think that the greatest shortcoming of most boards on which I have “ served is an inexperienced chairman or chairwoman.” [The] board need to be sufficiently diverse in education, background, “ ethnicity, and gender to be able to tackle everything that the company might have to deal with. With diversity, which may overcome group think, will come more room for disagreement. That is OK. The trick is to keep disagreement from becoming a dispute.” Conflicts in the Boardroom Survey 9 The respondents’ focus on soft skills can be contrasted with corporate governance, in which the majority have had the training they generally have already received (which is training both internally (57.6 percent) and externally (82.6 notably extensive). We found that, although the majority percent). These figures suggest potential for additional of respondents have not had internal training in conflict training in dealing with personal factors as well as in management, negotiation skills, or chairing meetings, the understanding broader board issues. (slim) majority have had some form of external training in these skills (see Figure 4). The exception is training in Figure 4: External and Internal Training Respondents Have Received 150 Yes - Internal 120 No - Internal No. of respondents 90 Yes - External 60 No - External 30 0 Con ict Negotiation Chairing Corporate Management Skills Meetings Governance A Gender Difference? Notably, while training is comparable for men and women in the other skills, we found a gender difference in the amount of skills training that respondents have received in negotiation skills: for example, 39.1 percent of men have received internal training and 62.5 percent have received external training; but just 11.4 percent of women have received internal training and 45.5 percent have received external training. (See Figure 5 and Table 7 on page 11.) There is also a notable difference between the answers of Figure 5: Percentages of Men and of Women men and women regarding their perception of the level Trained in Negotiation Skills of difficulty of dealing with emotions. While both men and women considered handling the emotions of those involved in the dispute to be something that occurred 62.5% frequently (31.3 percent of men had it as their most common complicating factor, and women saw it as the 45.5% second-most common complicating factor, after avoidance 39.1% of the issue), women considered the issue to be far less difficult to deal with than men did. (See Figure 6 on page 11.) 11.4% Men Women Men Women Internal Internal External External Training Training Training Training 10 Conflicts in the Boardroom Survey men considered emotions to be difficult or very difficult Figure 6: Gender Differences in Handling to deal with, placing its difficulty level second only to Emotions of Those Involved in Disputes dealing with competing factions. This skills gap between men and women — regarding 51.7% training in negotiation and handling emotions — is reflected in the distinction between the skills desired by 43.8% men and women. For women, negotiation skills were the 31.3% second-most commonly desired skill (with 71.0 percent 24.2% describing the skills as very useful), just behind the ability to have difficult conversations (75.8 percent). But for men, it was only the eighth-most highly valued skill (61.7 percent). The skills they most desired training in were 1) the ability to deal with different personalities (76.6 Men Women Men Women percent); 2) the ability to give and receive constructive Perceived Perceived Perceived Perceived Frequency Frequency Dif culty Dif culty critical feedback (74.5 percent); and 3) communication skills (72.6 percent). Only 43.8 percent of women considered emotions to be The importance of appreciating this gender difference difficult or very difficult to deal with — less difficult than is that a board may require different skills training competing factions, conflicts of personal versus private depending on its gender diversity. issues, and avoidance. On the other hand, 51.7 percent of Table 7: Most Desired Skills Training, by Gender Male Respondents Ability to deal with different personalities 76.6%* Ability to give and receive constructive critical feedback 74.5% Communication skills 72.4% Ability to chair an effective meeting 70.2% Ability to have difficult conversations 68.1% Mediation skills 67.0% Ability to deal with volatile personalities 64.2% Negotiation skills 61.7% Awareness of cultural issues 56.8% Ability to deal with politics outside the boardroom 49.5% Female Respondents Ability to have difficult conversations 75.8% Negotiation skills 71.0% Ability to deal with different personalities 69.7% Ability to give and receive constructive critical feedback 68.8% Ability to chair an effective meeting 62.5% Communication skills 60.6% Mediation skills 59.4% Ability to deal with politics outside the boardroom 59.4% Ability to deal with volatile personalities 53.1% Awareness of cultural issues 46.9% Percentages of respondents stating that the skills training would be very useful. * Conflicts in the Boardroom Survey 11 Impact of Enterprise Size on Resolving Conflict We found that the size of an organization made a notable difference in the percentage of board disputes that were not resolved. Respondents from smaller companies were more likely to say that the issue was not resolved than were those from larger enterprises. Of those surveyed, 24.1 percent from smaller enterprises said that their issues were frequently not resolved, compared to just 5.9 percent from medium enterprises and 15.6 percent from large enterprises. (See Figure 7.) (It should also be noted that a significant number of respondents across all enterprises stated that there were never occasions when their issues were not resolved.) enterprise respondents saw dealing with the emotion of Figure 7: Percentage of Issues Frequently Not those involved in the dispute as frequent or very frequent Resolved at Board Level, based on the company (and 65.4 percent of them considered it to be difficult size or very difficult to deal with), compared to 17.6 percent of medium-enterprise respondents and 25.8 percent of 24.1% large-enterprise respondents. A possible reason for this difference might be that small and medium enterprises tend to have smaller boards, making group cohesion more 15.6% 15.6% important to the participants. As an overall trend, we found little disparity in the amount of training that respondents received across 5.9% the different sectors. However, there is a significant difference in the skills that people want across the different sizes of organizations. (See Table 8). While Overall Small Medium Large being able to deal with different personalities is valued across all sizes, smaller enterprises place more emphasis on negotiation skills and being able to deal with more extreme personality types. “The ability to deal Another marked difference was in the kind of issues with volatile personalities” is prized as a skill by these respondents encountered as complicating factors in organizations more than with larger organizations. In resolving the conflict within the board. Exactly half of medium enterprises, there is a desire for process skills, those from small enterprises said they had encountered with “the ability to chair an effective meeting” being the avoidance of the issue frequently or very frequently, most desired skill, while those from the largest enterprises compared to just 21.2 percent of respondents from have most need for general communication skills. This medium enterprises and 19.1 percent of respondents may well reflect the different needs of organizations as from large enterprises. Also, 53.4 percent of small- they expand and encounter different problems. 12 Conflicts in the Boardroom Survey Table 8: Three Most Desired Skills Training — by Organization Size Small Enterprise Most Desired Ability to deal with different personalities 85.2%* Second-Most Desired (tie) Negotiation skills 77.8% Second-Most Desired (tie) Ability to deal with volatile personalities 77.8% Medium Enterprise Most Desired Ability to chair an effective meeting 78.8% Second-Most Desired Ability to give and receive constructive feedback 75.8% Third-Most Desired Ability to deal with different personalities 69.7% Large Enterprise Most Desired Ability to deal with different personalities 72.7% Second-Most Desired Ability to give and receive constructive feedback 72.3% Third-Most Desired Communication skills 71.6% *Percentage describing skill as very useful. Conclusion Overall, the results show the prevalence of boardroom disputes and the damaging effects that unresolved disputes can have. Even those disputes that are resolved still have a significant impact on a business, because they waste management time and distract from core business priorities. Further, we found that the majority of disputes are resolved by internal methods of negotiation and mediation, rather than through court action. Therefore, it is important for board members to be capable of resolving disputes themselves and thus they should continue to be trained in the skills needed to do so. However, we discovered that respondents find some disputes more difficult to resolve, and the most complicated to resolve are those that involve human factors such as competing factions and emotions. Our survey uncovered a skills gap in training for these types of issues, and we learned that the vast majority of respondents would appreciate more training in these soft skills. Training in how to handle different personalities and emotions (as well as increased training in negotiation and mediation skills) would equip boards to tackle disputes that are frequently extremely difficult because of board members’ reluctance to address these human factors. Conflicts in the Boardroom Survey 13 IFC CG Group’s DONOR partners 2121 Pennsylvania Avenue, NW Washington, DC 20433 USA Tel: +1 (202) 458 8097 cgsecretariat@ifc.org www.ifc.org/corporategovernance For information requests and general inquiries about Corporate Governance Dispute Resolution Program or this publication, please contact Alexey Volynets at avolynets@ifc.org and Frederick Way at info@cedr.com.