Managing conflict, power, and politics Danielle Fontaine, Gopal Kamalanathan, Matt Kenny, Rodrigo Natal, Thamara Sekhar, Yan Zhou

Organizational Conflict Organizational conflict is the clash that occurs when the goal-directed behavior of one group blocks or thwarts the goals of another.

Pondy’s Model of Organizational Conflict

Stage 1: Latent Conflict Interdependence Subunits’ desire for autonomy comes into conflict with the organization’s desire for coordination. Differences in Goals and Priorities The goals of one subunit may thwart the ability of another to achieve its goals. Bureaucratic Factors Status inconsistencies within an organization create conflict when subunits put their interests ahead of others. Incompatible Performance Criteria The organization’s way of monitoring, evaluating, and rewarding different subunits brings them into conflict. Competition for Scarce Resources To increase access to resources, subunits promote their interests and importance at the expense of other subunits.

Stage 2: Perceived Conflict and Stage 3: Felt Conflict Subunits become aware of conflict and begin to analyze it Conflict escalates as subunits battle over the cause Stage 3: Felt Conflict Subunits respond emotionally to each other and attitudes polarize “Us versus Them” attitudes surface Cooperation between subunits decreases What began as a small problem escalates into a much larger conflict

Stage 4: Manifest Conflict and Stage 5: Conflict Aftermath Subunits try to get back at each other Fighting and open aggression are common; organizational effectiveness suffers Stage 5: Conflict Aftermath Conflict is resolved in a way that leaves subunits feeling either combative or cooperative What happens when conflict reappears depends on how it was resolved the first time

Which stage is represented here?

Managing Conflict Organizational conflict can escalate rapidly and sour an organization’s culture Organizations must balance the need to have some “good” conflict with the need to prevent it from escalating into “bad” conflict The choice of conflict resolution method depends on the source of the problem

Managing Conflict: At the level of structure Altering the level of differentiation and integration to change task relationship Increase the number of integrating roles and assign top managers the responsibility to resolve conflict Design organization’s hierarchy of authority in line with current needs

Managing Conflict: At the level of attitudes and individuals Set up a procedural system that allows parties in conflict to air their grievances Engage a third party negotiator Exchange or rotate people between subunits Transfer/promote/fire employees CEO can use his/her power to resolve conflict and motivate units to cooperate

Managing Conflict: An Example Credit Suisse First Boston was formed by the merger of First Boston (based in New York) and Credit Suisse (based in London) First Boston made record profits and those employees were expecting hefty bonuses Bonuses were not paid as Credit Suisse incurred huge losses and the organization as a whole did not have a good year Conflict started to build, relations between First Boston and Credit Suisse became strained, divisions began fighting with top management and people left Credit Suisse First Boston in droves for competitors This conflict can be managed by redesigning the reward system

Managing Conflict: “Dual Concerns” Model

Organizational Power Organizational power is the mechanism through which conflict gets resolved It is the ability of one person or group to overcome resistance by others to resolve conflict and achieve a desired objective or result The possession of power is an important determinant of the kind of decisions that will be selected to resolve a conflict Conflict and power are intimately related

Sources of Organizational Power

Sources of Organizational Power Authority: the ultimate source of power; it is legitimized by the legal and cultural foundations on which an organization is based Control over resources: power that comes from the ability to control resources Control over information: access to strategic information and control over the flow of information Nonsubstitutability: if no one else can perform the tasks that a person or subunit performs, that person or subunit is nonsubstitutable

Sources of Organizational Power Centrality: the subunits that control the flow of resources through an organization’s production system are most central and have the ability to reduce the uncertainty facing other subunits Control over uncertainty: a subunit that can directly control and reduce the main sources of uncertainty or contingencies facing an organization has significant power Unobtrusive power: controlling the premises of decision making

Sega A leader in the home gaming console market with the 16- bit Sega Genesis R&D functions split across Japan and America Organizational power from previous successes Survival of the fittest environment: Sega allows parallel development of divergent ideas, then picks the most successful Fierce competition amongst development teams 1993: Sega plans for their next generation console: SOA: 32X – 32-bit add-on to the existing Genesis SOJ: Saturn – 32-bit console that utilizes CD-ROM technology over cartriges

Sega 1994: September: 32X is released in the U.S., with Sega predicting sales of 1 million units by Christmas November: Saturn is released in Japan. SOJ dedicates resources to marketing the Saturn launch in the U.S. 1995: May: Saturn is released in the U.S., 4 months ahead of schedule. Price $399 September: Sony launches the Playstation. Price $299 October: Sega announces it will cease development on the 32X and Genesis

Sega The downfall of Sega Flawed development process promoted the delay of conflict resolution Avoiding conflict lead to the escalation of problems facing the company

Using Power: Organizational Politics Organizational politics: activities taken within organizations to acquire, develop, and use power and other resources to obtain one’s preferred outcomes in a situation in which there is uncertainty or disagreement about choices It is important to understand even if there is no desire to play politics Astute political managers will use politics to build their power

Using Power: Organizational Politics Tactics for playing politics Increasing indispensability: become indispensable to the organization Increasing nonsubstitutability: develop specialized skills or knowledge that enables one to control a crucial contingency facing the organization Increasing centrality: accept responsibilities that enhance one’s reputation or that of one’s function

Using Power: Organizational Politics Associating with powerful managers symbiotic effect Building and managing coalitions strength in numbers Ability to influence (or manipulate) decision making: Controlling the agenda – how managers set framework to yield desired outcome Bringing an outside expert – may provide objective, more neutral perspective

Costs/Benefits of Organizational Power

Case example – Morgan Stanley leadership battle, 2001-2005 Phil Purcell vs. John Mack Purcell’s detractors believed he mismanaged the 1997 merger with Dean Witter Mack: “Purcell was not up to the job;” BOD took Purcell’s side and forced Mack to leave Conflict increased after Mack’s departure; stock performance and profits fell below expectations Purcell was perceived as “aloof,” not giving sufficient priority to investment banking segment Purcell’s reputation sank when poor results for his favored brokerage and credit card segments began to drag down the bank's institutional businesses In 2005, the board asked Purcell to step down No worthy successor was identified internally; the board asked John Mack to come back as CEO

Takeaways: Advice to Managers Conflict is an enduring part of organizational behavior and you must develop the necessary skills to analyze and manage it When conflict occurs, identify the source and move quickly to intervene and find a solution before the problem escalates When an important change to role or task relationships is made, always consider whether the change will create conflict and remember that solid organizational design can prevent conflict from emerging The appropriateness of a conflict management strategy depends on the source of the conflict

Questions?