What can you do if your board is in dispute or unable to manage a disagreement? Rob Oakley and Tzara Cheung from Bates Wells share some sage advice on conflict resolution and minimising the associated risk to your organisation.
In one sense, the changes in communication brought about by the Covid-19 pandemic have had a positive impact on trustee decision-making. We’ve seen how increased use of technology has allowed for more regular (virtual) board meetings and fuller discussion of the issues.
But with many charities facing severe financial and other operational challenges, there is potentially more for trustees to disagree about. Sometimes these disagreements can lead to internal disputes, which are time consuming at best and at worst potentially very damaging.
A healthy exchange of views
The first thing to note is that there is nothing wrong with disagreement. In its guidance, the Charity Commission is clear that ‘constructive debate and challenge are signs of healthy governance. They reflect the diversity of experience and independence of thought that the commission encourages trustee bodies to have.’
It’s also likely that the trustees will be able to proceed on the basis of a majority decision. So, the board may generally collectively approve a course of action even if not all of the trustees agree.
Record keeping
Record keeping is crucial. And the more contentious the issue, the more important it is that the minutes record what the trustees considered, discussed and agreed. Where there is disagreement, this should also be clearly minuted.
But exercise caution, even outside meetings. Heated discussions between board members often take place via email, by WhatsApp and other electronic means. These may be intended to be private and confidential conversations between one or more trustees, but there is a risk that they may have to be handed over following a data subject access request, or even in a subsequent legal dispute.
Comments made privately in the heat of the moment can be embarrassing – or even defamatory – in the cold light of day.
Expressing dissenting views
Trustees who disagree with the majority approach may want to make their views publicly known, especially when they believe they are ‘right’ and acting in the best interests of the charity.
They may want to circulate confidential information or legal advice that has been provided to the board outside of the board. In our experience, this can go badly wrong.
A trustee who goes on to argue a point in public or ‘leaks’ confidential information may well find themselves breaching their legal duties and facing a claim. It is not uncommon for a trustee on a crusade to (often wrongly) consider themselves protected by whistleblowing laws.
Confidentiality
Significant disharmony at trustee level can pose a dilemma for the board, in terms of access to information and advice.
The starting point is that all trustees have the right to receive the information they need to discharge their duties and fulfil their function.
However, there may be times where it will not be appropriate for the board to disclose certain information to a particular trustee or trustees where that information may be used improperly.
This area can be fraught with difficulty. Information may only be withheld from a trustee where they have motives that are contrary to the interests of the charity: this can be hard to prove, which makes for a difficult balancing act.
But there may be other solutions – asking a smaller sub-committee of the board to deal with a tricky issue, for example, can be one way of ringfencing the discussions and addressing concerns about confidentiality.
Reputation
Board disputes can bring unwelcome publicity. Trustees have obligations to protect their charity’s reputation – do make sure that there’s a communications plan in place that takes account of the interests and perspectives of your beneficiaries and other stakeholders.
For more on this, see our guide on 'Managing in a Crisis', which covers communication with your stakeholders and others.
The Charity Commission
The Charity Commission will rarely actively intervene if there is a dispute about board decisions or policies. It is for the trustees to try to resolve the dispute and the commission will only get involved in exceptional circumstances. Although the Charity Commission will expect to be informed if a trustee dispute reaches such a stage that it could be regarded as a ‘serious incident’.
Take a look at our 'Managing in a Crisis' guide for more on serious incident reporting. Even if the commission does become involved, there is still an expectation for trustees to work together to find a solution, which could include mediation or some other form of alternative dispute resolution process.
We’ve provided a guide to mediation here if you’d like to learn more.
Finally
In our experience, emotions often run high, and it can be hard – understandably – for the board to see their options clearly.
If a board dispute threatens to escalate, an early conversation with an independent adviser – be it a governance expert or a legal adviser – can go a long way towards keeping the heat out of the discussions and navigating a successful solution.
This article was first published in Bates Wells' guide 'Charities update: Focus on governance' and has been reproduced with kind permission from the team.
Authors: Rob Oakley and Tzara Cheung, Bates Wells. Visit the Bates Wells website for more information.