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Managing Conflict, Politics, and Negotiation ————————————————- Overview Successful leaders such as Bart Becht in “A Manager’s Challenge” can effectively use their power to influence others and to manage conflict to achieve win–win solutions. In Chapter 14 we described how managers, as leaders, influence other people to achieve group and organizational goals and how managers’ sources of power enable them to exert such influence.

In this chapter we describe why managers need to develop the skills necessary to manage organizational conflict, politics, and negotiation if they are going to be effective and achieve their goals, as does Bart Becht.

We describe conflict and the strategies managers can use to resolve it effectively. We discuss one major conflict resolution technique, negotiation, in detail, outlining the steps managers can take to be good negotiators.

Then we discuss the nature of organizational politics and the political strategies managers can use to maintain and expand their power and use it effectively. By the end of this chapter, you will appreciate why managers must develop the skills necessary to manage these important organizational processes if they are to be effective and achieve organizational goals.

| 2011 McGraw-Hill Higher Education Any use is subject to the Terms of Use and Privacy Notice. McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies. ———————————————— Organizational Conflict Organizational conflict The discord that arises when the goals, interests, or values of different individuals or groups are incompatible and those individuals or groups block or thwart one another’s attempts to achieve their objectives.

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is the discord that arises when the goals, interests, or values of different individuals or groups are incompatible and those individuals or groups block or thwart one another’s attempts to achieve their objectives. 7 Conflict is an inevitable part of organizational life because the goals of different stakeholders such as managers and workers are often incompatible. Organizational conflict also can exist between departments and divisions that compete for resources or even between managers who may be competing for promotion to the next level in the organizational hierarchy. |  |   | LO17-1| Explain why conflict arises, and identify the types and sources of conflict in organizations. |   | | p. 566    It is important for managers to develop the skills necessary to manage conflict effectively.

In addition, the level of conflict present in an organization has important implications for organizational performance. Figure 17. 1 illustrates the relationship between organizational conflict and performance. At point A there is little or no conflict, and organizational performance suffers. Lack of conflict in an organization often signals that managers emphasize conformity at the expense of new ideas, resist change, and strive for agreement rather than effective decision making. As the level of conflict increases from point A to point B, organizational effectiveness is likely to increase.

When an organization has an optimum level of conflict, as does Reckitt Benckiser in “A Manager’s Challenge” (point B), managers are likely to be open to, and encourage, a variety of perspectives; look for ways to improve organizational functioning and effectiveness; and view debates and disagreements as a necessary ingredient of effective decision making and innovation. As the level of conflict increases from point B to point C, conflict escalates to the point where organizational performance suffers.

When an organization has a dysfunctionally high level of conflict, managers are likely to waste organizational resources to achieve their own ends, to be more concerned about winning political battles than about doing what will lead to a competitive advantage for their organization, and to try to get even with their opponents rather than make good decisions. | Just another manic Monday? Inappropriately handling legitimate conflict can create lasting damage within one’s work group. |   | | Conflict is a force that needs to be managed rather than eliminated. 8 Managers should never try to eliminate all conflict but, rather, should try to keep conflict at a moderate and functional level to promote change efforts that benefit the organization. Additionally, managers should strive to keep conflict focused on substantive, task-based issues and minimize conflict based on personal disagreements and animosities. To manage conflict,19 managers must understand the types and sources of conflict and be familiar with strategies that can be effective in dealing with it. Figure 17. 1 The Effect of Conflict on Organizational Performance| p. 67 Types of ConflictThere are several types of conflict in organizations: interpersonal, intragroup, intergroup, and interorganizational (see Figure 17. 2). 20 Understanding how these types differ can help managers deal with conflict. INTERPERSONAL CONFLICT    Interpersonal conflict is conflict between individual members of an organization, occurring because of differences in their goals or values. Two managers may experience interpersonal conflict when their values concerning protection of the environment differ. One manager may argue that the organization should do only what is required by law.

The other manager may counter that the organization should invest in equipment to reduce emissions even though the organization’s current level of emissions is below the legal limit. INTRAGROUP CONFLICT    Intragroup conflict arises within a group, team, or department. When members of the marketing department in a clothing company disagree about how they should spend budgeted advertising dollars for a new line of men’s designer jeans, they are experiencing intragroup conflict. Some of the members want to spend all the money on advertisements in magazines.

Others want to devote half of the money to billboards and ads in city buses and subways. INTERGROUP CONFLICT    Intergroup conflict occurs between groups, teams, or departments. R&D departments, for example, sometimes experience intergroup conflict with production departments. Members of the R&D department may develop a new product that they think production can make inexpensively by using existing manufacturing capabilities. Members of the production department, however, may disagree and believe that the costs of making the product will be much higher.

Managers of departments usually play a key role in managing intergroup conflicts such as this. INTERORGANIZATIONAL CONFLICT    Interorganizational conflict arises across organizations. Sometimes interorganizational conflict occurs when managers in one organization feel that another organization is not behaving ethically and is threatening the well-being of certain stakeholder groups. Figure 17. 2 Types of Conflict in Organizations| p. 568 Sources of ConflictConflict in organizations springs from a variety of sources.

The ones we examine here are different goals and time horizons, overlapping authority, task interdependencies, different evaluation or reward systems, scarce resources, and status inconsistencies (see Figure 17. 3). 21DIFFERENT GOALS AND TIME HORIZONS    Recall from Chapter 10 that an important managerial activity is organizing people and tasks into departments and divisions to accomplish an organization’s goals. Almost inevitably this grouping creates departments and divisions that have different goals and time horizons, and the result can be conflict.

Production managers, for example, usually concentrate on efficiency and cost cutting; they have a relatively short time horizon and focus on producing quality goods or services in a timely and efficient manner. In contrast, marketing managers focus on sales and responsiveness to customers. Their time horizon is longer than that of production because they are trying to be responsive not only to customers’ needs today but also to their changing needs in the future to build long-term customer loyalty. These fundamental differences between marketing and production often breed conflict.

Suppose production is behind schedule in its plan to produce a specialized product for a key customer. The marketing manager believes the delay will reduce sales of the product and therefore insists that the product be delivered on time even if saving the production schedule means increasing costs by paying production workers overtime. The production manager says that she will happily schedule overtime if marketing will pay for it. Both managers’ positions are reasonable from the perspective of their own departments, and conflict is likely.

OVERLAPPING AUTHORITY    When two or more managers, departments, or functions claim authority for the same activities or tasks, conflict is likely. 22 This is precisely what happened when heirs of the Forman liquor distribution company, based in Washington, D. C. , inherited the company from their parents. One of the heirs, Barry Forman, wanted to control the company and was reluctant to share power with the other heirs. Several of the heirs felt they had authority over certain tasks crucial to Forman’s success (such as maintaining good relationships with the top managers of liquor companies).

What emerged was a battle of wills and considerable conflict, which escalated to the point of being dysfunctional, requiring that the family hire a consulting firm to help resolve it. 23 Figure 17. 3 Sources of Conflict in Organizations| p. 569 TASK INTERDEPENDENCIES    Have you ever been assigned a group project for one of your classes and had one group member who consistently failed to get things done on time? This probably created some conflict in your group because other group members were dependent on the late member’s contributions to complete the project.

Whenever individuals, groups, teams, or departments are interdependent, the potential for conflict exists. 24 With differing goals and time horizons, the managers of marketing and production come into conflict precisely because the departments are interdependent. Marketing is dependent on production for the goods it markets and sells, and production is dependent on marketing to create demand for the things it makes. DIFFERENT EVALUATION OR REWARD SYSTEMS    How interdependent groups, teams, or departments are evaluated and rewarded can be another source of conflict. 5 Production managers, for example, are evaluated and rewarded for their success in staying within budget or lowering costs while maintaining quality. So they are reluctant to take any steps that will increase costs, such as paying workers high overtime rates to finish a late order for an important customer. Marketing managers, in contrast, are evaluated and rewarded for their success in generating sales and satisfying customers. So they often think overtime pay is a small price to pay for responsiveness to customers. Thus conflict between production and marketing is rarely unexpected. Whenever groups or teams are interdependent, the potential for conflict exists. |   | | SCARCE RESOURCES    Management is the process of acquiring, developing, protecting, and using the resources that allow an organization to be efficient and effective (see Chapter 1). When resources are scarce, management is more difficult and conflict is likely. 26 For example, divisional managers may be in conflict over who has access to financial capital, and organizational members at all levels may be in conflict over who gets raises and promotions.

STATUS INCONSISTENCIES    The fact that some individuals, groups, teams, or departments within an organization are more highly regarded than others in the organization can also create conflict. In some restaurants, for example, the chefs have relatively higher status than the people who wait on tables. Nevertheless, the chefs receive customers’ orders from the waitstaff, and the waitstaff can return to the chefs food that their customers or they think is not acceptable. This status inconsistency—high-status chefs taking orders from low-status waitstaff—can be the source of considerable conflict between chefs and the waitstaff.

For this reason, some restaurants require that the waitstaff put orders on a spindle, thereby reducing the amount of direct order giving from the waitstaff to the chefs. 27Conflict Management Strategies If an organization is to achieve its goals, managers must be able to resolve conflicts in a functional manner. Functional conflict resolution means the conflict is settled by compromise or by collaboration between the parties in conflict (later in the chapter we discuss other, typically less functional ways in which conflicts are sometimes resolved). 8 Compromise A way of managing conflict in which each party is concerned about not only its own goal accomplishment but also the goal accomplishment of the other party and is willing to engage in a give-and-take exchange and make concessions. is possible when each party is concerned about not only its own goal accomplishment but also the goal accomplishment of the other party and is willing to engage in a give-and-take exchange and to make concessions until a reasonable resolution of the conflict is reached.

Collaboration A way of managing conflict in which both parties try to satisfy their goals by coming up with an approach that leaves them both better off and does not require concessions on issues that are important to either party. is a way of handling conflict in which the parties try to satisfy their goals without making any concessions but, instead, come up with a way to resolve their differences that leaves them both better off. 29 Bart Becht, from “A Manager’s Challenge,” excels at using collaboration to resolve conflicts; so does Ravi Kant, Managing Director of Tata Motors Ltd. ,30 as profiled in the following “Managing Globally” box.  |   | LO17-2| Describe conflict management strategies that managers can use to resolve conflict effectively. |   | | p. 570    | Ravi Kant Excels at CollaborationRavi Kant, managing director of Tata Motors Ltd. , used collaboration to address a conflict he faced as executive director of Tata Motors’ commercial vehicles unit. 31 The commercial vehicles unit of Tata Motors, the biggest automobile manufacturer in India, was interested in acquiring Daewoo’s truck division based in Gunsan, South Korea, to increase its capabilities. 32 The Korean truck division was doing poorly, and an auction was being held in Korea to sell off the unit.

When Kant traveled to Korea, he realized that there was resistance among some managers and employees at the Daewoo truck division to being potentially taken over by Tata Motors; they were concerned about what such a takeover would mean for the future of their company. 33|   | Managing Globally| | Ravi Kant lowered cross-cultural tensions in the Tata Motors’ acquisition of Daewoo’s truck division by meeting the Korean company’s employees on their own turf. |   | | Kant arranged for Tata managers who were trying to negotiate the deal to take lessons in the Korean language so they could better communicate with the Koreans. 4 He had brochures and other documents about Tata translated into Korean. Tata managers made presentations to multiple parties involved in the auction, including Daewoo managers and employees, the head of the local auto association, Gunsun’s mayor, and government decision makers in Seoul, Korea, including the prime minister. In these presentations, Tata managers indicated that if Tata were to win the auction, Daewoo employees would be able to keep their jobs, and efforts would focus on building the Daewoo truck unit into a key exporter while integrating it into Tata Motors (and the larger Tata Group of which it is a part).

Kant and Tata’s efforts paid off; Tata purchased Daewoo’s truck division for $102 million. 35 As Kwang-Ok Chae, CEO of Tata Daewoo,36 indicated, “Tata had done its homework in everything needed to do business here. ”37   Throughout the process, Tata managers showed respect for Daewoo employees and managers. 38 At Tata Daewoo a joint board of directors was created, and Kwang-Ok Chae retained his top management position as CEO of the company. 39 When Kant requested that two Tata top managers advise him, Chae made them a part of his top management eam. Together Indian and Korean managers focused on ways to increase Tata Daewoo’s product line and exports. Although Daewoo had focused on the Korean market, today Tata Daewoo is a major exporter of heavy trucks, and its revenues have increased substantially since the acquisition. 40Tata Daewoo is the second biggest manufacturer of heavy-duty trucks in Korea and now exports trucks to over 60 countries, including countries in the Middle East, South Africa, Eastern Europe, and Southeast Asia. 41p. 71    Clearly, the process of acquiring a company can be fraught with the potential for conflict, which if not effectively managed can harm both the acquiring company and the company being acquired. The collaborative way in which the acquisition that created Tata Daewoo was handled made both parties better off. Tata Daewoo is now a successful company, employees’ and managers’ jobs are secure, and the Tata Group as a whole is better off as a result of the acquisition. As Choi Jai Choon, a South Korean labor union leader, indicated, “It’s turned out to be a win–win situation. ”42|

In addition to compromise and collaboration, there are three other ways in which conflicts are sometimes handled: accommodation, avoidance, and competition. 43 When accommodation An ineffective conflict-handling approach in which one party, typically with weaker power, gives in to the demands of the other, typically more powerful, party. takes place, one party to the conflict simply gives in to the demands of the other party. Accommodation typically takes place when one party has more power than the other and can pursue its goal attainment at the expense of the weaker party.

From an organizational perspective, accommodation is often ineffective: The two parties are not cooperating with each other, they are unlikely to want to cooperate in the future, and the weaker party who gives in or accommodates the more powerful party might look for ways to get back at the stronger party in the future. When conflicts are handled by avoidance An ineffective conflict handling approach in which the parties try to ignore the problem and do nothing to resolve their differences. the parties to a conflict try to ignore the problem and do nothing to resolve the disagreement. Avoidance is often ineffective because the real source of the disagreement has not been addressed, conflict is likely to continue, and communication and cooperation are hindered. Competition An ineffective conflict handling approach in which each party tries to maximize its own gain and has little interest in understanding the other party’s position and arriving at a solution that will allow both parties to achieve their goals. ccurs when each party to a conflict tries to maximize its own gain and has little interest in understanding the other party’s position and arriving at a solution that will allow both parties to achieve their goals. Competition can actually escalate levels of conflict as each party tries to outmaneuver the other. As a way of handling conflict, competition is ineffective for the organization because the two sides to a conflict are more concerned about winning the battle than cooperating to arrive at a solution that is best for the organization and acceptable to both sides.

Handling conflicts through accommodation, avoidance, or competition is ineffective from an organizational point of view because the parties do not cooperate with each other and work toward a mutually acceptable solution to their differences. When the parties to a conflict are willing to cooperate with each other and, through compromise or collaboration, devise a solution that each finds acceptable, an organization is more likely to achieve its goals. 44 Conflict management strategies that managers can use to ensure that conflicts are resolved in a functional manner focus on individuals and on the organization as a whole.

Next we describe four strategies that focus on individuals: increasing awareness of the sources of conflict, increasing diversity awareness and skills, practicing job rotation or temporary assignments, and using permanent transfers or dismissals when necessary. We also describe two strategies that focus on the organization as a whole: changing an organization’s structure or culture and directly altering the source of conflict. STRATEGIES FOCUSED ON INDIVIDUALSINCREASING AWARENESS OF THE SOURCES OF CONFLICT  Sometimes conflict arises because of communication problems and interpersonal misunderstandings.

For example, different linguistic styles (see Chapter 16) may lead some men in work teams to talk more, and take more credit for ideas, than women in those teams. These communication differences can cause conflict when the men incorrectly assume that the women are uninterested or less capable because they participate less and the women incorrectly assume that the men are bossy and are not interested in their ideas because they seem to do all the talking. By increasing people’s awareness of this source of conflict, managers can help esolve conflict functionally. Once men and women realize that the source of their conflict is different linguistic styles, they can take steps to interact with each other more effectively. The men can give the women more chances to provide input, and the women can be more proactive in providing this input. p. 572    Sometimes personalities clash in an organization. In these situations, too, managers can help resolve conflicts functionally by increasing organizational members’ awareness of the source of their difficulties.

For example, some people who are not inclined to take risks may come into conflict with those who are prone to taking risks. The non-risk takers might complain that those who welcome risk propose outlandish ideas without justification, whereas the risk takers might complain that their innovative ideas are always getting shot down. When both types of people are made aware that their conflicts are due to fundamental differences in their ways of approaching problems, they will likely be better able to cooperate in coming up with innovative ideas that entail only moderate levels of risk.

INCREASING DIVERSITY AWARENESS AND SKILLS  Interpersonal conflicts also can arise because of diversity. Older workers may feel uncomfortable or resentful about reporting to a younger supervisor, a Hispanic may feel singled out in a group of non-Hispanic workers, or a female top manager may feel that members of her predominantly male top management team band together whenever one of them disagrees with one of her proposals. Whether or not these feelings are justified, they are likely to cause recurring conflicts.

Many of the techniques we described in Chapter 5 for increasing diversity awareness and skills can help managers effectively manage diversity and resolve conflicts that originate in differences among organizational members. Increasing diversity awareness and skills can be especially important when organizations expand globally and seek to successfully integrate operations in other countries, as illustrated in the following “Managing Globally” box. Xplane Integrates Operations in SpainXplane is a small consulting and design firm with global headquarters in Portland, Oregon, and an additional U. S. office in St. Louis, Missouri. 45 When Dave Gray, founder and chairman of the company, decided to expand operations by acquiring a small firm in Madrid, Spain, with around six employees, in the hopes of expanding operations in Europe as well as building capabilities to serve companies in Spanish-speaking countries, he learned firsthand the importance of increasing diversity awareness and skills.

Misunderstandings and conflict arose, ranging from a St. Louis employee inadvertently insulting Spanish employees during a dinner in Madrid to Spanish employees feeling excluded from communications and not integrated within Xplane’s operations. 46 For example, Stephen O’Flynn, who is a project manager in the Madrid office and originally came from Ireland, felt that some employees in the two U. S. offices almost seemed to forget that the company had a third office in Spain. 47|   | Managing Globally|

Gray realized that given cultural differences and the geographic distance between the U. S. and Spanish offices, it was vital to both improve communication across offices and provide more opportunities for employees in the different offices to interact with each other and establish a common understanding. Company e-mail, for example, should not be sent just to U. S. employees but also to employees in Spain. The company changed to a Web-based phone system so employees would need to dial only 4 digits (rather than 13) to make calls between Spain and the United States. 8 Wikis were created with photos of all employees. O’Flynn frequently called employees in Portland and St. Louis to discuss projects with them and encouraged other employees in the Madrid office to similarly reach out. As he indicates, “I did a lot of brokering to get people talking. ”49p. 573   | Xplane learned that plane tickets plus technology were needed to integrate Spanish and American workers; this infrastructure enables the company to continue expanding in Europe. |   | | Gray also realized that it was important for U. S. nd Spanish employees to have a chance to interact face-to-face and for more extended periods than a phone conversation, a dinner, or one-shot meeting in either country. To accomplish this, he created an exchange program for employees. 50 As part of the program, employees in each country can visit and work with their counterparts in the other country to build relationships, increase their diversity awareness and skills, and learn from each other. For example, a U. S. employee can stay in an apartment rented by Xplane in Madrid for a week and work with employees in the Spanish office.

Similarly, a Spanish employee can stay in an apartment rented by Xplane in Portland and work with employees in Portland for a week. 51 As Xplane CEO Aric Wood indicated, “We tried to close the gap through technology, but ultimately we had to buy a lot of airline tickets. ”52 By taking steps to increase diversity awareness and skills and foster effective communication, managers like Wood not only help alleviate sources of misunderstanding and potential conflict but also increase their chances of reaping the benefits that different perspectives and points of view can bring.

The Madrid office is now Xplane’s global headquarters; on April 1, 2010, Xplane opened an additional European office in Amsterdam in the Netherlands. 53| PRACTICING JOB ROTATION OR TEMPORARY ASSIGNMENTS  Sometimes conflicts arise because individual organizational members simply do not understand the work activities and demands that others in an organization face. A financial analyst, for example, may be required to submit monthly reports to a member of the accounting department.

These reports have a low priority for the analyst, who typically turns them in a couple of days late. On each due date the accountant calls the financial analyst, and conflict ensues as the accountant describes in detail why she must have the reports on time and the financial analyst describes everything else he needs to do. In situations such as this, job rotation or temporary assignments, which expand organizational members’ knowledge base and appreciation of other departments, can be a useful way of resolving the conflict.

If the financial analyst spends some time working in the accounting department, he may appreciate better the need for timely reports. Similarly, a temporary assignment in the finance department may help the accountant realize the demands a financial analyst faces and the need to streamline unnecessary aspects of reporting. USING PERMANENT TRANSFERS OR DISMISSALS WHEN NECESSARY  Sometimes when other conflict resolution strategies do not work, managers may need to take more drastic steps, including permanent transfers or dismissals.

Suppose two first-line managers who work in the same department are always at each other’s throats; frequent bitter conflicts arise between them even though they both seem to get along well with other employees. No matter what their supervisor does to increase their understanding of each other, the conflicts keep occurring. In this case the supervisor may want to transfer one or both managers so they do not have to interact as frequently. When dysfunctionally high levels of conflict occur among top managers who cannot resolve their differences and understand each other, it may be necessary for one of them to leave the company.

This is how Gerald Levin managed such conflict among top managers when he was chairman of Time Warner. Robert Daly and Terry Semel, one of the most respected management teams in Hollywood at the time and top managers in the Warner Brothers film company, had been in conflict with Michael Fuchs, a long-time veteran of Time Warner and head of the music division, for two years. As Semel described it, the company “was running like a dysfunctional family, and it needed one management team to run it. 54 Levin realized that Time Warner’s future success rested on resolving this conflict, that it was unlikely that Fuchs would ever be able to work effectively with Daly and Semel, and that he risked losing Daly and Semel to another company if he did not resolve the conflict. Faced with that scenario, Levin asked Fuchs to resign. 55p. 574 STRATEGIES FOCUSED ON THE WHOLE ORGANIZATIONCHANGING AN ORGANIZATION’S STRUCTURE OR CULTURE  Conflict can signal the need for changes in an organization’s structure or culture.

Sometimes managers can effectively resolve conflict by changing the organizational structure they use to group people and tasks. 56 As an organization grows, for example, the functional structure (composed of departments such as marketing, finance, and production) that was effective when the organization was small may cease to be effective, and a shift to a product structure might effectively resolve conflicts (see Chapter 10). Managers also can effectively resolve conflicts by increasing levels of integration in an organization.

Recall from Chapter 15 that Hallmark Cards increased integration by using cross-functional teams to produce new cards. The use of cross-functional teams sped new card development and helped resolve conflicts between different departments. Now when a writer and an artist have a conflict over the appropriateness of the artist’s illustrations, they do not pass criticisms back and forth from one department to another because they are on the same team and can directly resolve the issue on the spot. Sometimes managers may need to take steps to change an organization’s culture to resolve conflict (see Chapter 3).

Norms and values in an organizational culture might inadvertently promote dysfunctionally high levels of conflict that are difficult to resolve. For instance, norms that stress respect for formal authority may create conflict that is difficult to resolve when an organization creates self-managed work teams and managers’ roles and the structure of authority in the organization change. Values stressing individual competition may make it difficult to resolve conflicts when organizational members need to put others’ interests ahead of their own.

In circumstances such as these, taking steps to change norms and values can be an effective conflict resolution strategy. ALTERING THE SOURCE OF CONFLICT  When the source of conflict is overlapping authority, different evaluation or reward systems, or status inconsistencies, managers can sometimes effectively resolve the conflict by directly altering its source. For example, managers can clarify the chain of command and reassign tasks and responsibilities to resolve conflicts due to overlapping authority| ————————————————- Negotiation

Negotiation is a particularly important conflict resolution technique for managers and other organizational members in situations where the parties to a conflict have approximately equal levels of power. During negotiation A method of conflict resolution in which the parties consider various alternative ways to allocate