Conflict is part of life at any level where there are two parties that interact. We know conflict exists, but we seldom know how to best deal with it other than by instinct. In life there are numerous situations that arise that can develop into a conflict among colleagues, teams, departments and even among parties from external organizations. As is often the case, a compliance professional can find themselves directly or indirectly in the middle of a conflict. Compliance professionals are engaged in almost every aspect of the development, implementation, testing and improvement of a risk management program. Whether the organization is large or small, the compliance professional is the link between the stakeholders and the compliance programs. Therefore, the compliance professional is in the position of influencing — for better or for worse — the pressures and distractions of growing conflicts that can sour partnerships, delay efforts and even derail the success of important initiatives.
In the AML field, parties working toward the same goals frequently find themselves caught up in conflicting positions, especially when there is no clear solution to an issue. Applying conflict resolution techniques to manage complex situations can be an advantage in improving the risk management processes. The intent of this article is not to make you a conflict expert, but to increase your awareness about conflict, recognize the skills you already possess, and give you some communication tools that can help enhance the way you handle your next conflict scenario.
Conflict is an ugly word. If you look up conflict in the dictionary the definitions and examples provided go from bad to worse. Just reading the definitions makes you feel uncomfortable. It is no wonder that we try to ignore conflict to see if it will go away on its own. Although, conflict can be destructive at its worse, it can also be an opportunity to improve conditions and promote movement toward a viable resolution. There are various academic definitions of conflict, but a basic definition is that "conflict is a belief that if one party gets what it wants, the other (or others) will not be able to do so."1 In compliance, conflict is inherited on opposing needs, limited resources and competing priorities.
Communication is the key to opening the channels of collaboration
Let us run through a typical and frequent scenario for anybody involved in risk management. Let us say that there are new regulations in place and an institution needs to assess how to comply with the new requirements. The compliance representative will most likely be involved in reviewing existing program elements to identify those that already meet the new requirements or that can be leveraged to incorporate those new requirements; then, identify additional information and new controls needed. There will be a need for analysis of how certain requirements could be met following a risk-based approach, and there might be questions on what is the appropriate risk-based analysis. Finally, before any new programs can be implemented, there might be a need for additional resources from technology or training, or even the development of centralized units to handle the higher risk clients. In each of those three situations, the compliance representative is sure to encounter conflicts deriving from differences of opinions, business priorities and limited resources. To resolve the issues between the various stakeholders and manage the conflict that arises along the way, you will need to apply conflict resolution techniques. As a successful compliance officer, you are probably using these techniques now, even if you are not aware you are doing so. For example, you might act as a facilitator driving group discussions among stakeholders from different functions in order to assess the impact of new regulations and define the plan of action to meet new requirements. During the group meetings it is likely that differences of opinions will arise on what is the right risk approach to follow based on business priorities, risk tolerance and current conditions. You may need to act as a mediator to bring parties together to find common ground on the reasoning behind a certain business decision compared to the potential exposure. Finally, the recommendations coming out of the meetings may require additional funding, which puts the compliance representative in the position of negotiating with senior management to secure resources.
Facilitation, mediation and negotiation are the cornerstone methodologies used by conflict resolution experts. They study each technique and its variances to build their tools of the trade to be expert facilitators, mediators and negotiators that are brought in to help handle escalating conflicts in search of resolution. In your case, you have to assume the role of a facilitator, mediator and negotiator on a regular basis without the benefit of specialized training. Here lies the importance of becoming familiar with conflict foundations and techniques that may give you an edge when dealing with conflict. You will not become a conflict expert overnight, but you can be more deliberate on recognizing the situations that require conflict management before they escalate out of control. A starting point to understanding conflict is acknowledging its existence, and not rejecting it. Use conflict as an opportunity to leverage the perspective of the opposing parties. Start by focusing on communication. Communication is the key to opening the channels of collaboration. All the conflict resolution methods previously mentioned rely on conflict resolution communication skills to reach individuals. By engaging parties to talk and listen to each other conflict resolution practitioners help build trust and get at the heart of the issues as illustrated by Neil Katz, John Lawyer, and Marcia Koppelman Sweedler in their 2011 book Communication And Conflict Resolution Skills.
In their book, Katz et al. provide an excellent resource to improve your communication skills related to conflict. The book discusses many fundamental skills necessary for improved communication. One of these skills is reflective listening. In reflective listening you first collect data and then you repeat it as a reflection of what was said. This is active listening by focusing the attention on the other party to assimilate the verbal and non-verbal information provided.2 Then, you repeat what you heard using your own words. This is critical because it is the very act of paying attention to the other person that helps you read cues of the issues and emotions being expressed. Reflective listening lets the other person know that you are interested in what they are saying. More importantly, by repeating what you heard the other person feels that you understand the issues. Keep in mind that sometimes you may need to clarify what you heard to help avoid miscommunication, but in general confirming what the person said and meant without judging, arguing or agreeing with the message opens communication and fosters cooperation. As an example, a compliance officer may face push back from a frustrated account officer who is being asked to complete another remedial project on due diligence of a group of clients that have been deemed high risk under new regulatory guidelines. The account officer may express his complaint saying in a tense tone "How many times do I have to update these files? It is not as if I do not know my clients. I need to be bringing new business, and not be wasting my time filling out forms." By using reflective listening, you can perceive his frustration and acknowledge it. You may say: "This update of the client's information is time consuming. You know your clients. You feel this impacts your productivity, and it upsets you." At this point, you are not agreeing with him nor are you exempting him from having to update his files, but you have let him know that he has been heard. Sometimes just letting the other person know that you understand helps diffuse animosity. The conversation has a better chance of taking a turn toward finding a way to expedite the review. The same skill can be used across the board during negotiations, staff meetings and individual discussions. Keep in mind that during reflective listening you are not providing your opinions. This is not where you work out a solution. This is just a first step to breakthrough conflict toward an open discussion of issues to find a potential resolution. Of course there is the added bonus of truly hearing the perspective of the other person or group that the new regulation is impacting. You may discover that you have more in common than you originally thought. Reflective listening is an art, and it requires practice. Katz et al. suggest that one key element is to avoid toxic words. These are words that would immediately sour any discussion and shatter cooperation. Imagine the response of the account officer to your request should you have answered his statements by saying "there is no room for laziness." You have a choice on how to deal with conflict. I have given just a glimpse of this skill.
Keep in mind that sometimes you may need to clarify what you heard to help avoid miscommunication
Another tool used by conflict practitioners is reframing. Reframing as the word indicates changes the frame of the conflict. Conflict frames are related to the perception and interaction toward conflict based in previous experiences. In other words, it is the different ways a person may see and respond to conflict, as outlined in Joseph Folger, Marshall Poole, and Randall Stutman's 2001 book Working Through Conflict.3 The same situation can be viewed inversely by two individuals depending on many factors including predisposition to situations they have experienced in the past. Let us imagine that two teammates find themselves at odds over who should lead a new project that overlaps the lines of business that they support. Competition for leadership will be a factor. If one of the people involved has been passed over for a promotion before, that person might be on the offensive from the moment the project was announced. On the other hand, the other person might feel insecure about leading the project due to a lack of experience compared to their counterpart. This person might then be on the defensive even before any interaction takes place. When the manager names the lead, one of the two will feel wronged, and may react based on his or her frame of thought about the issue. The manager would need to address the escalating problem by reframing the conflict. Ultimately, the manager might have picked the lead based on the line of business the person supports and not based on the individual. In fact, it could have been a strategic decision depending on what line of business is funding the project or what group has the higher risk. Reframing will be accomplished by focusing on the team rather than the individual, and the external factors influencing the decision process rather than the team members' perceived circumstances. Reframing goes beyond communication to the analysis of the underlying issues and sentiments shaping the conflict.
Clearly, communication is just a beginning. Conflict is a complex phenomenon with its own dynamics. Beware that people handle conflict in different ways depending on multiple factors from their personal conflict styles, to cultural differences and personal experiences. For example, some people are ready to face conflict situations head-on while others prefer to avoid conflict at all costs. Avoidance can lead to conceding without trying to find the best solution. Depending on cultural patterns individuals may find confrontation offensive while others may see it as a sign of strength and leadership.4 Personal experiences shape our view of the world and predispose individuals to react to conflict differently.5 In addition, conflict is impacted by factors beyond the parties involved in the conflict. External and internal factors influence parties and the conflict itself. Only two parties might be at the table, but they bring with them a baggage of issues and their decisions may impact many beyond their direct control. In fact, conflicts have a cycle of escalation and de-escalation that can be triggered unintentionally. For example, conflict between two teams can escalate to a departmental show of force for control and power if senior managers feel their positions are threatened. All these factors are at play at any scale, and they are particularly heightened under pressure in high-risk conditions.
Although this article referenced conflict from a compliance professional's perspective, an increased awareness about conflict management is a valuable skill for any professional regardless of their expertise. Some people have a natural inclination to be peacekeepers. They have the ability to bring sides together, and not hush away the problems. You may not have that natural inclination, but conflict analysis and resolution techniques are as valid for you as for the person that was born to lead a diplomatic mission abroad because whether you choose to deal with conflict or not, conflict will find you. Embrace it!
M. Carolina Rivas, CAMS, principal, Engaged AML Solutions Inc., Plantation, Florida, USA, email@example.com
- Pruitt, D. & Kim, S. H. (2003) Social Conflict: Escalation, Stalemate, and Settlement (3rd ed.). New York: Mcgraw-hill.
- Katz, N. H., Lawyer, J. W. & Koppelman Sweedeler, M., (2011) Communication And Conflict Resolution Skills (2nd ed.) Kendall/Hunt Publishing Company.
- Folger, J. P., Poole, M. S. & Stutman, R.K., (2001). Working Through Conflict. (7th ed). New York: Longman.
- Augsburger, D. (1992). Conflict Mediation across Cultures. Louisville, Ky: John Know Press.
- Byrne, S. and Carter, N. (1996, December). Social Cubism. Journal of Peace & Conflict Studies 3(2): 52-71