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It is inevitable for conflict to arise when people work together and engage with various stakeholders in business. People have different experiences, skills, and opinions and, under the right set of circumstances, those differences escalate to conflict. Conflict isn’t necessarily a bad thing, healthy and constructive conflict is a component of high-functioning companies.

While some companies can be applauded for their ability to resolve conflicts it should be noted that some conflicts are not necessary and can be avoided by putting in place mechanisms for conflict prevention. No wonder some people believe that, “Good leaders are great at resolving conflict. Great leaders keep conflict from arising in the first place”.

The ZimCode advises that companies need to prevent conflicts and, when they occur, they should be resolved in a professional manner. The ZimCode identifies scenarios that can cause conflicts if they are not handled well.

In doing so, it highlights the good corporate governance foundations that every company has to adhere to in order to avert conflict. The ZimCode draws attention to the fact that it costs much less for a company to invest in proper policies that enhance conflict prevention than it is to resolve conflicts that can emanate from such policy oversights. Conflicts can cost the company its image, productivity as well as its market share, hence the need to prevent or expediently manage conflict when it arises.

An important pillar for conflict prevention that the ZimCode identifies is professional conduct at all levels. The Board, Management and employees should be accustomed to a culture of professionalism both at an individual level and as representatives of the offices they hold.

It entails that they should not use their powers for improper purposes i.e. obtaining a bribe, secret commission or illegal inducement of any sort. A business courtesy such as a gift should be discouraged especially in circumstances that create the appearance of an impropriety.

The Company’s accountability and reporting system should be very clear and must be practiced by all its employees and stakeholders. The ZimCode advocates for the separation of the office of the Chairperson and that of CEO because when these are vested in a single person there is room for poor governance which often creates conflict.

In principle, no one should be supervising themselves as it compromises the accountability structure. In the same manner, the management through its CEO should be accountable to the Board and the Board to the shareholders.

Transactions between the company and the shareholder should be at arm’s length, transparent and fully disclosed in the Annual Report of the company. Material conflict of interest may arise but if it persists the ZimCode advises that Officers of the company implicated in the conflict must resign. In the same vein, loan agreements between a company and its executive directors should be discouraged as they promote material conflict.

It is in the best interest of the company to be always transparent to its employees, shareholders and stakeholders on all its transactions.

Transparency and adequate disclosure of both negative and positive aspects affecting the company ensures that assumptions, ambiguity and misconception are weeded out. These can be sources of conflict if information concerning certain company business is not properly conveyed.

Having noted that corporate conflicts are very common, conflict resolution is a necessary component, and those in a leadership position must be skilled in conflict resolution mechanisms and techniques. When conflicts go unaddressed, they can have a negative impact on productivity and teamwork.

In order to maintain a healthy working environment, the ZimCode recommends full and timely disclosure of any conflict or potential conflict to the Board. Corporate conflict resolution must be based on the provisions of the law and internal policies that adopt best practices as well as voluntary codes.

In addressing potential conflicts and conflict situations the goal should not be to punish, but an inquiry seeking to mend rather than destroy relationships. Conflict has to be acknowledged before it can be managed and resolved.

The tendency by leaders to trivialise or ignore conflict is discouraged. It is important for leaders to note that conflict involves people’s emotions, perceptions and actions therefore all these need to be addressed to resolve the conflict. A lasting solution to a conflict involves replacing the negative experience with positive ones which can re-produce a healthy working environment.

Conflicts should be arbitrated by leaders who are neutral to the issues under discussion and must not be biased towards any party. Each party should be given ample time to express themselves without feeling judged.

It is not surprising then that the most important step in resolving conflict is simply listening to involved parties in order to completely understand the nature of the conflict.

In cases where the Board, management and shareholders are conflicted to preside over the case, then the company should be in a position to engage a neutral arbitrator. The ZimCode encourages the use of a dispute resolution consultant whose independence is clear to all parties involved in the conflict.

The ZimCode recommends that, where necessary the Board may create a Corporate Conflict Resolution (CCR) committee with clear terms of reference to assist with conflict resolution. CCR committee should have at least two (2) independent board members with a representative of the minority shareholders, all being appointed on the basis of experience, integrity, competence and effectiveness in corporate conflict resolution.

To avoid prejudice, resolutions of corporate conflicts reached should be respected by the parties and implemented expeditiously.

For more information on the ZimCode contact: [email protected]