International Journal of Business and Social Science Vol. 7, No.

6; June 2016

Corporate Governance and Conflict Management

Rasha Al Qawasmeh
PHD– Business Management
Girne American University
North Cyprus

Abstract
This paper acknowledges the importance of an immaculate corporate governance system and effective conflict
management within the workplace as the principle ingredient of organization success. Therefore, the article
dwells on how best to apply managerial practices to achieve the expected triumph. In addition, sources and
methods of conflict resolution are discussed. Conflicts inhibit organizations from achieving their strategic goals
and objectives through escalating employees’ goal blindness. Claims and assertions of the paper are based on the
literature review of the topic “Corporate Governance and Conflict Management.” A collection of literature is
sampled and reviewed accordingly. The findings are summarized in considerable detail.
Keywords: Governance; Conflict; Conflict Management
1. Introduction
The success of an organization is primarily grounded on the effectiveness of its corporate governance and conflict
management systems (Keddy, 2010). On one hand, corporate governance is a phrase used to refer to rules,
processes, and practices by which a company is controlled and directed. It is entails establishing a balance of the
interests of the various stakeholders such as the management, shareholders, suppliers, customers, government,
financiers, and the community. Given that corporate governance is constituted of the framework for achieving the
organization’s goals, it practically encompasses the entirety of management spheres ranging from corporate
disclosure and performance measurement to internal controls and action plans. On the other hand, places of work
are characterized by constant personal conflicts ensuing among members of staff. This may result to an
immensely stressful environment. Letting such a situation get out of hand will only result to a further impaired
working environment (Yadav, 2013). Conflicts at the workplace emanate from a number of sources: different
values, poor communication, poor performance, differing interests, resource scarcity, and personality clashes
among others. It is upon the management to move fast and intervene before arising conflicts ruin the mission, as
well as the vision of the company.
These two areas of study have received overwhelming attention in the previous two decades. Apparently, scholars
have developed theories related to corporate governance that ensure success of an organization (Doherty, 2008).
The theoretical frameworks so produced help companies maneuver organizational challenges by providing a
meaningful platform where rules, processes, and practices are built. Similarly, scholars have presented a wide
research on conflict management and resolution. Conflicts within an organization come out as a very poisonous
element that can bring down not only a firm but also an entire industry. Again, the management must seek the
help of theoretical frameworks to enable them handle workplace conflicts. Corporate governance and conflict
management form the backbone of this paper. Diverse literature related to the two subjects will be reviewed.
2. Methods used
Being an article reviewing various literature materials, the methodology is not complicated. The method adopted
is a discussion written in prose. However, some items have been organized numerically to ease reading and
understanding.

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3. Discussion
Best managerial practices – Corporate governance
Victor Lipman, a Forbes contributor, emphasizes that a successful organization is built on a strong foundation of
corporate governance. In his theory, he says that an employee's productivity is among the primary outcomes of
effective management practices. Research indicates that an exceedingly high number of non-management staffs
are widely disengaged implying that they do not work to their full productivity potential. Such a situation can be
improved in a number of ways as suggested by Lipman (Lipman, 2013).
First, an organization should concentrate on offering economic incentives to employees. This has been ongoing in
the majority of companies. Nevertheless, such incentives have only been channeled to the senior-level employees.
This has resulted in a total neglect of the low-level employees. Most managers forget that this level of employees
also contribute equally to the success of the company. Therefore, Lipman recommends that organizations to offer
attractive economic incentives at all levels for the purposes of organizational success (Mandal, 2006). However,
he cautions that this may turn out to me expensive. This should be remedied by assessing the cost benefit schedule
to ensure additional payouts balance with the productivity of employees.
Second, it has been a culture that feedback is channeled upwards and rarely downwards. This is another point of
failure. Organizations should develop a culture of sending feedbacks to juniors. This is a cornerstone for
functional management (Lipman, 2013). Feedbacks should serve as motivation to employees. They should feel
recognized and important to the organization. As a result, they would elevate the productivity hence success of the
organization.
Third, respect for employees is important for organizational success. In essence, employees should be respected
for more than what they are for the company. They should be recognized and made feel that way. Respect shown
for the persons they, in addition to the job they do makes them feel obligated to go an extra mile for the sake of
the company’s success (Lipman, 2013). Fourth, training is needed more at the middle managerial level than the
senior leadership training. Companies fail to notice that a lot of work is dispensed at the middle than the senior
level. Training must be universal at all levels if an organization has to succeed. Fifth, an organization should be
ready to provide timely support for its employees. This may take several forms. It may be emotional support when
a member of staff faces unfair criticism, replacing inefficient or outdated equipment, or offer support for a logical
work-life balance level among others. Timely support earns a company good reputation and builds employee
loyalty and goodwill (Lipman, 2013). Finally, the senior leadership must behave in a respectable way. Employees
will often be demoralized by substandard behavior portrayed by their seniors. An admirable senior team a secret
motivation for employees; they must have a leadership to emulate. This gears a company towards success.
Another important management practice that guarantees organization success is the development of the correct
culture within the company. A positive organization culture can be achieved by applying straightforward
management practices as suggested by Michael VanBruaene (VanBruaene, 2012). According to Michael, working
culture should be founded on collaboration, trust, accountability, and mutual respect. Such management practices
channel employees’ focus through the same strategy. This informs them of what is expected of them. It is such
responsibilities that they are held accountable. Management practices should also establish a point of
collaboration between managers and employees. Also, important is the establishment of essential communications
between managers and employees.
VanBruaene recommends a number of strategies to this effect. To begin with, the management should carry out a
succinct documentation and communication of strategic objectives for the whole organization. Even after they are
strategically placed for everyone to see, there should always be a constant communication of the same. This
becomes a unifying factor for the entirety of the company’s employees. It positions the members of staff on the
same platform hence a positive working culture. In addition, it is important to make constant mentions of strategic
goals in the company’s verbal and documented communications (VanBruaene, 2012).
Second, there should be clearly documented strategic objectives detailing on how an organization will achieve its
strategic goals. These should be supported with a realistic methodology that provides a lead in the attainment of
operating objectives. It is essential for such objectives to be quantifiable, specific and bear an inclusion of
efficiency and effective measures. Efforts geared towards the achievement of the set objectives are significant for
organization culture (VanBruaene, 2012). They help managers and employees identify the important things to do
and the focal point of their collaborative and combined resources, as well as attention.
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The senior leadership of the organization should be keen on frequently emphasizing the significance of the
strategic objectives, in addition to related work processes.
Third, there should be a clear documentation of each employee’s responsibilities. This should apply to all levels.
Although this is majorly a function of management, the employees should be given an opportunity to make their
contribution. With such a combined effort, both parties are fully aware of the responsibilities given to them, as
well as the grounds on which employee performance are evaluated. Such a combined effort and mutual
contribution results into a strong work culture and boosts employees’ morale. As an equalization measure,
employees should also be made aware of the responsibilities due to managers (Kandt, 2002). This is an
improvement of employees’ understanding of the important things and a minimization of confusion that can
potentially damage the organization’s culture.
Fourth, there should be regular meetings between direct report employees and managers. This is aimed at
reviewing progress made and measuring the triumph made in achieving the set strategic objectives. The essence
of these meetings is communication, accountability, and collaboration. This combination is expected to bring
about a positive work culture (VanBruaene, 2012). A discussion on how performance will be improved should
take the center stage in such meetings. Managers and employees should assess what additional contribution they
can make to increase productivity even though success has already been achieved (Mandal, 2006). Efforts must be
made towards maintaining an upward trend as far as success is concerned.
VanBruaene (2012) emphasizes that the leadership must come from the executives. It is the responsibility of the
senior management to the set the pace for the organization. This should be followed by a proper adherence to the
principles of leadership by managers at all levels. Both the senior and middle level management need to depict the
following characteristics on a day to day basis: accountability for their actions, fair employees’ treatment, leads by
example, genuine actions and communications, and show interest in individual member of staff as a unique
person and the job they do (VanBruaene, 2012).
With ever-increasing business complexities, the role of performance management and improvement has become
the most popular topics. This is as a result of the need for organizations to become increasingly efficient and
effective. Business strategies have to be immaculate and achieve more with further limitations in a bid to remain
competitive. Therefore, performance management is another managerial practice that sets an organization sets on
the success track. Performance management is different from the regular performance appraisal. It rather aims at
enabling managers to measure and evaluate each employee’s performance, as well as optimize productivity
(VanBruaene, 2012). This is achieved by matching an employee’s daily functions to strategic objectives,
clarifying accountability in relation to performance expectations, pinpointing skill development focus and training
activity choices, aligning each employee’s performance with their compensation and decisions for career
planning, and drawing documents for legal purposes meant to pivot decisions and minimize disputes.
Researchers claim that a poorly structured performance management process leads to dire consequences that
curtail business success. The failure to align individual goals with the operating business strategy wastes both
time and resources. Minimal employee engagement can be interpreted as under performance. Carrying out
inconsistent evaluation rewards and criteria result into higher attrition, mistrust, and lower productivity. In case
employees performing very well fail to notice a conspicuous differentiation in opportunities, performance ratings
and compensations from those who are poor performers, may affect their morale (Yadav, 2013). It is obvious that
stakeholders demand more and more transparency from the company of interests. There may arise stakeholder
mistrust where documentation, accountability, and visibility are lacking. Failure to keep proper performance
records may interfere with training priorities and development decisions. This implies that actions taken will not
be at the best interest of the company. Managers may lack important information alerting them of issues
threatening the company’s survival at an early stage. Finally, failure to maintain up-to-date and proper
performance records may attract legal issues (Doherty, 2008).
In the light of the consequences highlighted above, performance management is incredibly important to an
organization’s success. Performance management processes can only function as required by establishing a link
between daily business operations and strategic objectives. Ensuring a proper progress tracking and obstacle
identification method, and effective goal setting are primary ingredients to achieve bottom line outcomes and
success.

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Keeping a regular track of progress against performance objectives gives an organization the chance to recognize,
as well as reward members of staff for their exceptional contribution towards success (Anderson, 2010). It is
natural that employees want to be recognized for their efforts and feel that their contribution is worthy. In a bid to
ensure this happens within the emblems of human resources, employees should be made to understand their goals
and objectives, and their significance in the achievement of the organization’s goals.
4. Conflict Management at the Work Place
A conflict is defined as a sharp opposition or disagreement of ideas or interests. Conflict is known to be a
common phenomenon at the workplace and has ironically been termed as a “part of doing business”. At any
workplace, conflict is both natural and normal. When workers within an organization are in conflicts, there tend to
be an increase in absenteeism, lowered morale, and decreased productivity. Research shows that at least 25% of
managers’ time is spent on conflict resolution (Unviersity of Colorado Boulder, 2012). This results into decreased
office performance. Conflict management and resolution at the workplace has been identified as one of the
biggest challenges that face employees and managers. In a normal situation, a conflict environment is
characterized by two responses: avoidance (run away) or battle it out. Either way, the parties to conflict feel
dissatisfied with the outcomes since there lacks any resolution. Scholars argue that learning a meaningful and
peaceful conflict management practices may help make a harmful situation a chance for improved performance
and creativity.
Sources of Conflict
Conflicts emanate from numerous sources in a workplace. Here are just a few major sources.
i. Poor communication
Application of diverse styles of communication may bring about misunderstandings between an employee and the
manager, or between employees. Total absence of communication further deepens a conflict.
ii. Diverse values
Given that the workplace is constituted of people drawn from diverse backgrounds, their cultural values and views
of the world may be sharply different. Lack of tolerance and acceptance of such differences in people’s way of
life may result to misunderstandings hence conflicts.
iii. Differing interests
In addition to organizational goals that merge workers, each harbors some personal interests. Emphasis on
individual interests may lead workers to fight between themselves.
iv. Resource scarcity
In a bid to do their work, employees may feel that they need to compete over the only available resources. In an
environment where resource scarcity prevails, conflicts are bound to occur. This happens irrespective of initial
notification of such scarcity.
v. Personality clashes
In a similar way where workplaces are made up of people from different cultures, personalities differ widely, as
well. In the event that employees fail to accommodate and appreciate each other’s way of approaching and
solving problems, conflicts will arise.
vi. Poor performance
This is common within a department. There are cases where a number of employees are assigned the same task. In
case one underperforms burdening his or her fellow, conflicts are bound to occur. Untimely address of such a
situation makes conflicts inevitable.
Conflicts necessitate the management to be on high alert. It should be in a position to prevent their occurrence, as
well as resolve them. There is a widely agreed and approved way of addressing conflicts at the workplace. This is
done through taking measures such as avoidance, compromise, accommodation, collaboration, and competition.
The management should apply the mentioned measures in an effort to prevent conflicts. Scholars agree that
compromise or collaboration is the most effective measures to address conflicts because it eliminates winner/loser
scenarios (University Alliance, 2012).

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Apparently, a majority of managers face such situations almost daily. They must, therefore, make it their ultimate
goal to positively resolve arising conflicts (University of Colorado Boulder, 2012). The conflict resolution process
should adopt the following principles:
i. Succinct articulation of conflict causes – This amounts to an open acknowledgement that divergent
perceptions will be present.
ii. Be purposeful – Conflict resolution process requires the arbitrator to make it known the reason he or she
want the conflict resolved.
iii. Communication – it should be clear how the conflict will be handled and solved.
iv. Face-to-face resolution – Communication mediums such as emails, letters, memos among others are
discouraged in the process of conflict resolution. Conflicting parties must hold face-to-face meetings as
these are more productive.
v. Take a break – This aims at taking care of emotions that may interfere with the process.
The management should inform the employees that the best conflict resolution strategy is dealing with it. Ignoring
such a situation only deepens the problem. Therefore, workers should be encouraged to face their troubles upon
occurrence (Keddy, 2010). This way, a positive work environment will be created for everybody.
5. Conclusion
For an organization to succeed, it has to adhere to an effect corporate governance system, as well as conflict
management. The former comprises management spheres ranging from corporate disclosure and performance
measurement to internal controls and action plans essential a company’s triumph. A conflicted workforce may fail
an organization’s strategic goals and objectives. The management should adopt recommended processes of
conflict resolution.

References
Anderson, R. (2010). Corporate Governance: A Synthesis of Theory, Research, and Practice. Hoboken: John
Wiley & Sons.
Doherty, N. (2008). The Essential Guide to Workplace Mediation and Conflict Resolution: Rebuilding Working
Relationships. London: Kogan Page Publishers.
Kandt, R. K. (2002). Organizational Change Management Principles and Practices. Jet Propulsion Laboratory.
Keddy, J. (2010). Managing Conflict at Work: Understanding and Resolving Conflict for Productive Working
Relationships. London: Kogan Page Publishers.
Lipman, V. (2013). 7 Management Practices That Can Improve Employee Productivity. Forbes.
Mandal, S. (2006). Management: Principles and Practice. New York: Jaico Publishing House.
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Springer

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