The interviewer is looking to hear about your ability to communicate with your team and professionally handle issues when they arise.
Think of an example where you worked closely with your team to resolve a conflict. You could also offer a scenario where you mediated an issue between two coworkers. Show that you can keep your head on your shoulders when dealing with conflict.
"I have strong conflict management skills and in my current position, have had to exercise those skills from time to time. We are in a high-stress, highly commissioned work environment which can cause a lot of unnecessary conflict among the team. When a conflict arises, I like to deal with it swiftly, openly, and with poise. Transparency and openness are how I lead my team, so I will call a group meeting where we express concerns and get it all out on the table."
"Conflict is a normal part of being in business. It is most easily remedied by clear, open, and honest communication among team members."