by the Center for Effective Dispute Resolution of the International Finance Corporation (IFC)
A dynamic board seeks to stimulate the flow of ideas, identify key issues, consider alternatives, and make informed decisions. And for that you need deliberation and debate. But these positive processes can sometimes turn into boardroom disagreements that must be dealt with properly and promptly; otherwise, they can devolve into acrimonious disputes that undermine the board’s effectiveness and the company’s performance.
This paper describes key steps that boards can take to mitigate the impact of disputes—and, even better, to minimize the risk of disputes arising in the first place. It deals with the board as a collective body that needs to cultivate its ability to manage disputes effectively—starting by establishing good corporate governance policies and practices.
The paper presents the Corporate Governance Dispute Resolution Self-Assessment and Progression Matrix, which summarizes specific elements of key steps the boards should undertake to effectively prevent and manage disputes:
- Clarify the roles of management and the board.
- Establish orderly board processes.
- Ensure the proper flow of information.
- Encourage a board culture that allows for effective discussions, debates, and deliberations.
- Step out of the boardroom to gain new perspectives.
- Apply dispute resolution skills and techniques.
- Incorporate ADR into the company’s culture and practices.