Managing conflict in the workplace is an essential skill for both leaders and employees alike.
Not all risks are quantifiable.
In private equity, some of the most significant costs may remain hidden.
Beneath pristine metrics and sound strategies, unspoken tensions can undermine performance across your portfolio.
This phenomenon, often called ”covert conflict” deserves attention.
What is covert conflict?
It’s when team members appear to agree but later sabotage initiatives through inaction, delays, and selective information sharing.
It typically doesn’t show up in due diligence.
If you’re not actively surfacing it, you could be exposed.
1: The Hidden Resistance Pattern
The pattern is familiar: deadlines slip. Initiatives stall. The same issues resurface monthly.
Your portfolio MD/CEO may not openly defy your strategy.
Instead, you might face passive resistance masquerading as alignment.
Potential warning signs:
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Decisions lose momentum after meetings
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Issues become more complex instead of resolved
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Information flows up selectively, hiding the full picture
These could be signs of unstated reservations.
2: The Counterintuitive Approach
PE firms that address these issues effectively often consider these approaches:
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Create psychological safety first: Before demanding execution, they establish forums for candid conversation without fear.
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Ask different questions: Instead of “Why aren’t you hitting targets?”:
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- “What risks might we be missing?”
- “What would make this plan more achievable?”
- “Where do you feel caught between competing priorities”
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Make room for difficult emotions/humanity
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Build trust through transparency
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Develop conflict-intelligent leadership
3: The Question You Should Ask
When teams shift from covert to constructive conflict, forward momentum comes naturally.
Team members begin to empathise with each other’s perspectives instead of defending positions.
Are your portfolio company leaders aligned with your value creation plan?
Or are they pretending to agree while resistance festers beneath the surface?
If you suspect the latter, applying more pressure won’t deliver returns.
It’s time for a different approach.
Leadership teams are human. KPIs alone won’t reveal their fears.
Our coaches understand executive anxiety because we’ve been on both sides of the table: in those situations as executives AND coaching executives through these anxieties, for decades.
Praesta helps PE firms facilitate conversations that can help protect returns.
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