In the workplace, misunderstandings, power struggles, and stress can cause conflict to fester and take a toll on productivity. The best organizations put in place conflict management processes and systems to confront conflict directly. Unfortunately, too many organizations fail to do so—and suffer the consequences of sweeping conflict under the rug.
Take the case of Paradigm Capital and its owner, Candace King Weir, which were fined $2.2 million by the Securities and Exchange Commission (SEC) for retaliating against James Nordgaard, an employee who blew the whistle on tax-avoidance strategies that Paradigm carried out for the hedge fund PCM Partners. PCM Partners was not notified that a conflict of interest existed between Weir and a company she owned, CL King & Associates, as reported in Operational Risk & Regulation.
In particular, the SEC faulted Paradigm for not having outsiders on its conflict-resolution committee, a structure that appeared to contribute to the retaliation against Nordgaard. Nordgaard was demoted from head trader to compliance assistant and otherwise marginalized after reporting the wrongdoing he observed to the SEC. It was the first penalty handed down by the SEC’s new whistleblower protection program.