Although there are great rewards as well, leaders know how challenging it can get at times. There are so many things under your control, and you are accountable and responsible both for the successes and for the failures. However, one of the most challenging aspects of being a manager is dealing with conflict and other difficult situations at the office.

The top challenging situations at the office require lots of tact, diplomacy and compliance with company procedures, but also lots of people skills to defuse a potential conflict. We are talking about conflicts which could undermine morale in the office, create sides and the unspoken feeling that you should be taking sides (us vs. them). A skilled manager will always solve things in a manner which is fair to everyone and protects the core interests of the organization.

1. Dealing with Unethical Behavior

The unethical behaviour we are talking about here is not the situation when someone actively undermines the interest of the organization by leaking confidential information. We are talking about people doing unethical things thinking that they are actually benefiting the company and improving their productivity. The recent scandal at Wells Fargo bank, where many employees created fake accounts to reach their sales targets, is such an example.

It is important for a manager to enforce ethical behaviour not just in difficult situations, but every day. When this situation occurs, you should be very transparent about your decisions and show your team why you took the respective actions and how to prevent such situations from occurring again.

2. Budget Cuts

Even before you have to communicate your decision to lay off several members of your team, rumours will be running around. Most likely, you will be approached in confidence by several employees asking whether they could be affected by a budget cut.

At this point in the difficult situation, you should demonstrate your ethics (see above) because you should not favour any employee over the others. Even if you are not bound by confidentiality to keep the future decision to yourself until the right moment to disclose it, you should not give anyone information individually that you are not prepared to share collectively.

3. A Valued Employee Leaves the Company

Some employees seem to be the heart and soul of a company. They come up with creative ideas, have a large network and have the talent to bring people together and create successful teams. When such a person decides to leave the company to pursue other professional challenges, this could potentially tear apart the team. Low morale and motivation could undo in months what your organization has achieved in years.

At this moment, you should step in and act as the new binding element for the team, inspiring them with your own enthusiasm and dedication. As a leader, you are responsible for maintaining a positive attitude in the office while you look for a replacement for the employee who left the company.

4. Enforcing Policies with the Risk of Losing a Valued Employee

This is the reverse side of the situation above. Sadly, some professionals start believing that they are “like air” for a company and they are irreplaceable because they do an amazing job. And they go ahead and breach a company policy. It could be anything from using the work equipment for personal reasons to cheating on the expense report.

At this moment, no matter how much you believe the company really needs this person, you have to let them go. Doing otherwise sends two wrong signals to the rest of the team: that the employee is truly untouchable (and they could grow into an office bully) and that rules can be broken if you are really good at your work.

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Holger Arians is the co-founder of, an online community platform that connects all past and present participants of the Harvard Program for Leadership Development (PLD), and the CEO of Dominet Digital Corporation, an Australian investment and consulting group with a focus on digital, innovation and investments. Holger is an Alumni of Harvard Business School and holds an Executive MBA from ESSEC Business School in France and Mannheim Business School in Germany.