Report

Conflicts in the Boardroom Survey - Results and Analysis

June 25, 2014

A joint project of Centre for Effective Dispute Resolution and the Corporate Governance Group of the IFC explores the causes, nature, and methods of resolving corporate governance disputes. As part of this project, CEDR and IFC carried out a global survey of 191 directors and board members (including IFC Nominee Directors and members of the Private Sector Advisory Group) to find out about their experiences with and attitudes toward boardroom disputes.

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 conflicts are not dealt with properly, they can devolve into acrimonious disputes that undermine a company’s operation and performance. Left unchecked and unattended, these disputes escalate quickly into public matters that can have severe, long-term consequences for the company and its key stakeholders. These disputes can lead to poor performance, scare investors, produce waste, divert resources, cause share values to decline, and, in some cases, paralyze a company.

We found that 29.6 percent of respondents had experience with a boardroom dispute affecting the survival of an organization.
 

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See also:

Boardroom Disputes - How to Manage the Good, Weather the Bad, and Prevent the Ugly