MANAGING CONFLICT, POWER, AND POLITICSDanielle 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

Stage 2: Perceived 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

Stage 4: Manifest Conflict 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?