Questions to help you identify potential conflicts of interest on your board: Part 3

In Part 2, we looked at Tier-II conflicts, or those between directors and stakeholders. In Part 3 we look at Tier-III conflicts, or those between stakeholders and other stakeholders. These conflicts can appear in three ways:

1. Conflicts of interest between stakeholders and the company – a company is an aggregation of stakeholders bound together by economic interest. All stakeholders expect to receive a sizable slice of the pie in exchange for their input. It is challenging for directors to decide which stakeholder group to prioritize when it comes to value distribution and how to slice up the pie. In conflict situations, customers can hurt companies, and companies can harm the interests of customers.
2. Conflicts of interest between different classes of stakeholders – conflicts can arise between the different classes of stakeholders, e.g. shareholders…