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Galvatrens, a consumer products company in Houston, has a whistle-blower's lawsuit on its hands. Mike Fields, a former divisional sales manager, claims that he was wrongfully terminated for trying to report an illegal scheme designed by a colleague to inflate numbers. He'd left the company's COO a confidential voice mail about it, but the COO referred the matter to Mike's boss rather than following up on it himself. Mike says his boss subsequently told him his performance wasn't up to snuff and he'd have to accept a demotion and a transfer if he wanted to stay with the company--knowing that Mike, a divorced father with joint custody of his kids, couldn't leave town. How could all of this have happened? Chip Brownlee, the CEO of Galvatrens, had taken steps a while back to upgrade the company's procedures for uncovering misconduct and solving conflicts. He and the general counsel had instituted a number of changes, including a new open-door policy for raising workplace concerns. Although the policy encouraged employees to go to their immediate supervisors, it emphasized that they could approach any manager at any level for assistance, and it included a ban on retaliation against whistle-blowers. Chip and the board need to figure out why, with all those channels in place, only one person came forward with information about the sales scheme--and why that person ended up suing the company. How should Galvatrens strengthen its system for uncovering misconduct, and what roles should the board and management play? Commenting on this fictional case study in R0704A and R0704Z are Stephen R. Hardis, the nonexecutive chairman of Marsh & McLennan; Hal Shear, the managing director of Board Assets; Mary Rowe, an ombudsperson for the Massachusetts Institute of Technology; and Jackson W. Robinson, the founder and president of Winslow Management.

Galvatrens, a consumer products company in Houston, has a whistle-blower's lawsuit on its hands. Mike Fields, a former divisional sales manager, claims that he was wrongfully terminated for trying to report an illegal scheme designed by a colleague to inflate numbers. He'd left the company's COO a confidential voice mail about it, but the COO referred the matter to Mike's boss rather than following up on it himself. Mike says his boss subsequently told him his performance wasn't up to snuff and he'd have to accept a demotion and a transfer if he wanted to stay with the company--knowing that Mike, a divorced father with joint custody of his kids, couldn't leave town. How could all of this have happened? Chip Brownlee, the CEO of Galvatrens, had taken steps a while back to upgrade the company's procedures for uncovering misconduct and solving conflicts. He and the general counsel had instituted a number of changes, including a new open-door policy for raising workplace concerns. Although the policy encouraged employees to go to their immediate supervisors, it emphasized that they could approach any manager at any level for assistance, and it included a ban on retaliation against whistle-blowers. Chip and the board need to figure out why, with all those channels in place, only one person came forward with information about the sales scheme--and why that person ended up suing the company. How should Galvatrens strengthen its system for uncovering misconduct, and what roles should the board and management play?

Galvatrens, a consumer products company in Houston, has a whistle-blower's lawsuit on its hands. Mike Fields, a former divisional sales manager, claims that he was wrongfully terminated for trying to report an illegal scheme designed by a colleague to inflate numbers. He'd left the company's COO a confidential voice mail about it, but the COO referred the matter to Mike's boss rather than following up on it himself. Mike says his boss subsequently told him his performance wasn't up to snuff and he'd have to accept a demotion and a transfer if he wanted to stay with the company--knowing that Mike, a divorced father with joint custody of his kids, couldn't leave town. How could all of this have happened? Chip Brownlee, the CEO of Galvatrens, had taken steps a while back to upgrade the company's procedures for uncovering misconduct and solving conflicts. He and the general counsel had instituted a number of changes, including a new open-door policy for raising workplace concerns. Although the policy encouraged employees to go to their immediate supervisors, it emphasized that they could approach any manager at any level for assistance, and it included a ban on retaliation against whistle-blowers. Chip and the board need to figure out why, with all those channels in place, only one person came forward with information about the sales scheme--and why that person ended up suing the company. How should Galvatrens strengthen its system for uncovering misconduct, and what roles should the board and management play? Commenting on this fictional case study in R0704A and R0704Z are Stephen R. Hardis, the nonexecutive chairman of Marsh & McLennan; Hal Shear, the managing director of Board Assets; Mary Rowe, an ombudsperson for the Massachusetts Institute of Technology; and Jackson W. Robinson, the founder and president of Winslow Management.

This is an MIT Sloan Management Review article. Conflict is inevitable in any large organization, and these conflicts, particularly in the board of directors, can often be costly to a firm both in terms of real dollars and in lost organizational focus. However, drawing on best practices in conflict management, the author suggests that organizations can take a comprehensive approach to settle conflict quickly inside the board, making use of four resources available to any organization. The first is the board itself. Directors and boards should take the lead in addressing their own problems and disagreements using the most constructive approaches possible. Boards also need to establish a set of internal and external resources. Internally, they can rely on resources such as general counsel, the chief ethics officer, and the organizational ombudsman. Externally, organizations can rely on mediation and arbitration as well as investigative counsel. In cases of last resort, the board can rely on public resources such as the courts and government agencies. However, this approach may not be enough. The authors suggest a new role: the board ombudsman, for a highly competent, independent, and confidential resource who can help directors and boards to solve problems through effective, informal methods, such as assisted negotiation or shuttle diplomacy.