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.
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| ————————————————- NegotiationNegotiation 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 resources to come up with a solution acceptable to all of them.
the parties to a conflict try to come up with a solution acceptable to themselves by considering various alternative ways to allocate resources to each other. 57 Sometimes the sides involved in a conflict negotiate directly with each other.Other times a third-party negotiator An impartial individual with expertise in handling conflicts and negotiations who helps parties in conflict reach an acceptable solution.
is relied on. Third-party negotiators are impartial individuals who are not directly involved in the conflict and have special expertise in handling conflicts and negotiations;58 they are relied on to help the two negotiating parties reach an acceptable resolution of their conflict. 59 When a third-party negotiator acts as a mediator A third-party negotiator who facilitates negotiations but has no authority to impose a solution. his or her role in the negotiation process is to facilitate an effective negotiation between the two parties; mediators do not force either party to make concessions, nor can they force an agreement to resolve a conflict. Arbitrators A third-party negotiator who can impose what he or she thinks is a fair solution to a conflict that both parties are obligated to abide by. , on the other hand, are third-party negotiators who can impose what they believe is a fair solution to a dispute that both parties are obligated to abide by. 0| | | LO17-3| Understand the nature of negotiation and why integrative bargaining is more effective than distributive negotiation.
| | | p. 575 Distributive Negotiation and Integrative BargainingThere are two major types of negotiation—distributive negotiation and integrative bargaining. 61 In distributive negotiation Adversarial negotiation in which the parties in conflict compete to win the most resources while conceding as little as possible. , the two parties perceive that they have a “fixed pie” of resources that they need to divide. 62 They take a competitive, adversarial stance.Each party realizes that he or she must concede something but is out to get the lion’s share of the resources. 63 The parties see no need to interact with each other in the future and do not care if their interpersonal relationship is damaged or destroyed by their competitive negotiation. 64 In distributive negotiations, conflicts are handled by competition.
In integrative bargaining Cooperative negotiation in which the parties in conflict work together to achieve a resolution that is good for them both. , the parties perceive that they might be able to increase the resource pie by trying to come up with a creative solution to the conflict.They do not view the conflict competitively, as a win-or-lose situation; instead they view it cooperatively, as a win–win situation in which both parties can gain. Trust, information sharing, and the desire of both parties to achieve a good resolution of the conflict characterize integrative bargaining. 65 In integrative bargaining, conflicts are handled through collaboration and/or compromise. Consider how Adrian Hofbeck and Joseph Steinberg, partners in a successful German restaurant in the Midwest, resolved their recent conflict.Hofbeck and Steinberg founded the restaurant 15 years ago, share management responsibilities, and share equally in the restaurant’s profits. Hofbeck recently decided that he wanted to retire and sell the restaurant, but retirement was the last thing Steinberg had in mind; he wanted to continue to own and manage the restaurant.
Distributive negotiation was out of the question, for Hofbeck and Steinberg were close friends and valued their friendship; neither wanted to do something that would hurt the other or their continuing relationship.So they opted for integrative bargaining, which they thought would help them resolve their conflict so both could achieve their goals and maintain their friendship. Strategies to Encourage Integrative BargainingManagers in all kinds of organizations can rely on five strategies to facilitate integrative bargaining and avoid distributive negotiation: emphasizing superordinate goals; focusing on the problem, not the people; focusing on interests, not demands; creating new options for joint gain; and focusing on what is fair (see Table 17. 1). 6 Hofbeck and Steinberg used each of these strategies to resolve their conflict.
| | | LO17-4| Describe ways in which managers can promote integrative bargaining in organizations. | | | EMPHASIZING SUPERORDINATE GOALS Superordinate goals are goals that both parties agree to regardless of the source of their conflict. Increasing organizational effectiveness, increasing responsiveness to customers, and gaining a competitive advantage are just a few of the many superordinate goals that members of an organization can emphasize during integrative bargaining.Superordinate goals help parties in conflict to keep in mind the big picture and the fact that they are working together for a larger purpose or goal despite their disagreements.
Hofbeck and Steinberg emphasized three superordinate goals during their bargaining: ensuring that the restaurant continued to survive and prosper, allowing Hofbeck to retire, and allowing Steinberg to remain an owner and manager as long as he wished. Table 17. 1 Negotiation Strategies for Integrative Bargaining• Emphasize superordinate goals. Focus on the problem, not the people. • Focus on interests, not demands. • Create new options for joint gain. • Focus on what is fair.
p. 576 FOCUSING ON THE PROBLEM, NOT THE PEOPLE People who are in conflict may not be able to resist the temptation to focus on the other party’s shortcomings and weaknesses, thereby personalizing the conflict. Instead of attacking the problem, the parties to the conflict attack each other.
This approach is inconsistent with integrative bargaining and can easily lead both parties into a distributive negotiation mode.All parties to a conflict need to keep focused on the problem or on the source of the conflict and avoid the temptation to discredit one another. Given their strong friendship, this was not much of an issue for Hofbeck and Steinberg, but they still had to be on their guard to avoid personalizing the conflict.
Steinberg recalls that when they were having a hard time coming up with a solution, he started thinking that Hofbeck, a healthy 57-year-old, was lazy to want to retire so young: “If only he wasn’t so lazy, we would never be in the mess we’re in right now. Steinberg never mentioned these thoughts to Hofbeck (who later admitted that sometimes he was annoyed with Steinberg for being such a workaholic) because he realized that doing so would hurt their chances for reaching an integrative solution. | Integrative bargaining brings all parties to the table in order to create a solution based on honest assessment of the problem and a willingness to honor others’ interests and values. | | | FOCUSING ON INTERESTS, NOT DEMANDS Demands are what a person wants; interests are why the person wants them.When two people are in conflict, it is unlikely that the demands of both can be met. Their underlying interests, however, can be met, and meeting them is what integrative bargaining is all about. Hofbeck’s demand was that they sell the restaurant and split the proceeds.
Steinberg’s demand was that they keep the restaurant and maintain the status quo. Obviously both demands could not be met, but perhaps their interests could be. Hofbeck wanted to be able to retire, invest his share of the money from the restaurant, and live off the returns on the investment.Steinberg wanted to continue managing, owning, and deriving income from the restaurant. CREATING NEW OPTIONS FOR JOINT GAIN Once two parties to a conflict focus on their interests, they are on the road to achieving creative solutions to the conflict that will benefit them both. This win–win scenario means that rather than having a fixed set of alternatives from which to choose, the two parties can come up with new alternatives that might even expand the resource pie. Hofbeck and Steinberg came up with three such alternatives.
First, even though Steinberg did not have the capital, he could buy out Hofbeck’s share of the restaurant. Hofbeck would provide the financing for the purchase, and in return Steinberg would pay him a reasonable return on his investment (the same kind of return he could have obtained had he taken his money out of the restaurant and invested it). Second, the partners could seek to sell Hofbeck’s share in the restaurant to a third party under the stipulation that Steinberg would continue to manage the restaurant and receive income for his services.Third, the partners could continue to jointly own the restaurant. Steinberg would manage it and receive a proportionally greater share of its profits than Hofbeck, who would be an absentee owner not involved in day-to-day operations but would still receive a return on his investment in the restaurant. p. 577 FOCUSING ON WHAT IS FAIR Focusing on what is fair is consistent with the principle of distributive justice, which emphasizes the fair distribution of outcomes based on the meaningful contributions that people make to organizations (see Chapter 5).It is likely that two parties in conflict will disagree on certain points and prefer different alternatives that each party believes may better serve his or her own interests or maximize his or her own outcomes.
Emphasizing fairness and distributive justice will help the two parties come to a mutual agreement about what the best solution is to the problem. Steinberg and Hofbeck agreed that Hofbeck should be able to cut his ties with the restaurant if he chose to do so. They thus decided to pursue the second alternative described and seek a suitable buyer for Hofbeck’s share.They were successful in finding an investor who was willing to buy out Hofbeck’s share and let Steinberg continue managing the restaurant. And they remained good friends. When managers pursue these five strategies and encourage other organizational members to do so, they are more likely to be able to effectively resolve their conflicts through integrative bargaining. In addition, throughout the negotiation process, managers and other organizational members need to be aware of, and on their guard against, the biases that can lead to faulty decision making (see Chapter 7). ————————————————- Organizational Politics Managers must develop the skills necessary to manage organizational conflict for an organization to be effective.
Suppose, however, that top managers are in conflict over the best strategy for an organization to pursue or the best structure to adopt to use organizational resources efficiently. In such situations resolving conflict is often difficult, and the parties to the conflict resort to organizational politics and political strategies to try to resolve the conflict in their favor.Organizational politics Activities that managers engage in to increase their power and to use power effectively to achieve their goals and overcome resistance or opposition. are the activities that managers (and other members of an organization) engage in to increase their power and to use power effectively to achieve their goals and overcome resistance or opposition. 68 Managers often engage in organizational politics to resolve conflicts in their favor.
| | LO17-5| Explain why managers need to be attuned to organizational politics, and describe the political strategies that managers can use to become politically skilled. | | | Political strategies Tactics that managers use to increase their power and to use power effectively to influence and gain the support of other people while overcoming resistance or opposition. are the specific tactics that managers (and other members of an organization) use to increase their power and to use power effectively to influence and gain the support of other people while overcoming resistance or opposition.
Political strategies are especially important when managers are planning and implementing major changes in an organization: Managers need not only to gain support for their change initiatives and influence organizational members to behave in new ways but also to overcome often strong opposition from people who feel threatened by the change and prefer the status quo. By increasing their power, managers are better able to make needed changes. In addition to increasing their power, managers also must make sure they use their power in a way that actually enables them to influence others.The Importance of Organizational PoliticsThe term politics has a negative connotation for many people. Some may think that managers who are political have risen to the top not because of their own merit and capabilities but because of whom they know. Or people may think that political managers are self-interested and wield power to benefit themselves, not their organization. There is a grain of truth to this negative connotation. Some managers do appear to misuse their power for personal benefit at the expense of their organization’s effectiveness.
Nevertheless, organizational politics are often a positive force. Managers striving to make needed changes often encounter resistance from individuals and groups who feel threatened and wish to preserve the status quo. Effective managers engage in politics to gain support for and implement needed changes. Similarly, managers often face resistance from other managers who disagree with their goals for a group or for the organization and with what they are trying to accomplish. Engaging in organizational politics can help managers overcome this resistance and achieve their goals. p. 78 Indeed, managers cannot afford to ignore organizational politics. Everyone engages in politics to a degree—other managers, coworkers, and subordinates, as well as people outside an organization, such as suppliers.
Those who try to ignore politics might as well bury their heads in the sand because in all likelihood they will be unable to gain support for their initiatives and goals. Political Strategies for Gaining and Maintaining PowerManagers who use political strategies to increase and maintain their power are better able to influence others to work toward the achievement of group and organizational goals. Recall from Chapter 14 that legitimate, reward, coercive, expert, and referent powers help managers influence others as leaders. ) By controlling uncertainty, making themselves irreplaceable, being in a central position, generating resources, and building alliances, managers can increase their power (see Figure 17. 4). 69 We next look at each of these strategies. CONTROLLING UNCERTAINTY Uncertainty is a threat for individuals, groups, and whole organizations and can interfere with effective performance and goal attainment.
For example, uncertainty about job security is threatening for many workers and may cause top performers (who have the best chance of finding another job) to quit and take a more secure position with another organization. When an R&D department faces uncertainty about customer preferences, its members may waste valuable resources to develop a product, such as smokeless cigarettes, that customers do not want. When top managers face uncertainty about global demand, they may fail to export products to countries that want them and thus may lose a source of competitive dvantage. Figure 17. 4 Political Strategies for Increasing Power| p. 579 Managers who can control and reduce uncertainty for other managers, teams, departments, and the organization as a whole are likely to see their power increase.
70 Managers of labor unions gain power when they can eliminate uncertainty over job security for workers. Marketing and sales managers gain power when they can eliminate uncertainty for other departments such as R&D by accurately forecasting customers’ changing preferences.Top managers gain power when they are knowledgeable about global demand for an organization’s products.
Managers who can control uncertainty are likely to be in demand and be sought after by other organizations. MAKING ONESELF IRREPLACEABLE Managers gain power when they have valuable knowledge and expertise that allow them to perform activities no one else can handle. This is the essence of being irreplaceable. 71 The more central these activities are to organizational effectiveness, the more power managers gain from being irreplaceable.BEING IN A CENTRAL POSITION Managers in central positions are responsible for activities that are directly connected to an organization’s goals and sources of competitive advantage and often are located in central positions in important communication networks in an organization. 72 Managers in key positions have control over crucial organizational activities and initiatives and have access to important information.
Other organizational members depend on them for their knowledge, expertise, advice, and support, and the success of the organization as a whole is seen as riding on these managers.These consequences of being in a central position are likely to increase managers’ power. Managers who are outstanding performers, have a wide knowledge base, and have made important and visible contributions to their organizations are likely to be offered central positions that will increase their power. GENERATING RESOURCES Organizations need three kinds of resources to be effective: (1) input resources such as raw materials, skilled workers, and financial capital; (2) technical resources such as machinery and computers; and (3) knowledge resources such as marketing, information technology, or engineering expertise.To the extent that a manager can generate one or more of these kinds of resources for an organization, that manager’s power is likely to increase.
73 In universities, for example, professors who win large grants to fund their research, from associations such as the National Science Foundation and the Army Research Institute, gain power because of the financial resources they generate for their departments and the university as a whole. BUILDING ALLIANCES When managers build alliances, they develop mutually beneficial relationships with people both inside and outside the organization.The parties to an alliance support one another because doing so is in their best interests, and all parties benefit from the alliance.
Alliances give managers power because they provide the managers with support for their initiatives. Partners to alliances provide support because they know the managers will reciprocate when their partners need support. Alliances can help managers achieve their goals and implement needed changes in organizations because they increase managers’ levels of power.As illustrated in the following “Focus on Diversity” box, many powerful top managers such as Indra Nooyi, chair and CEO of PepsiCo, are particularly skilled when it comes to building alliances. 74p. 580 | Indra Nooyi Builds AlliancesBy all counts Indra Nooyi is a powerful business leader. 75 As CEO and chair of PepsiCo, she oversees a company with over $43 billion in revenues and over 198,000 employees; Pepsi-Cola, Lay’s, Doritos, Tropicana, Mountain Dew, Gatorade, and Quaker are among Pepsi’s many well-known brands.
6 She effectively uses her vision for PepsiCo, “Performance with Purpose,” both to motivate and guide Pepsi employees and to communicate PepsiCo’s stance on important issues such as health, obesity, and protecting the natural environment around the world. 77 In 2008 she was included in Time magazine’s list of “The World’s Most Influential People”;78 in 2007, 2008, and 2009 she was ranked the most powerful woman in business by Fortune magazine. 79| | Focus on Diversity| Nooyi, born and raised in India, was senior vice president of strategic planning at PepsiCo before assuming the top post on October 1, 2006. 0 When the PepsiCo board of directors was deciding who would be the next CEO of the company, two senior executives at PepsiCo were under consideration, Nooyi and Michael White, vice chairman. 81 When Nooyi found out the board had chosen her, one of her top priorities was to ensure that White would stay at PepsiCo, the two would maintain the great relationship they had with each other that had evolved from years of working together, and she would have his support and advice. 82 At the time White was on vacation at his beach house in Cape Cod, Massachusetts.Nooyi flew to Cape Cod and the two walked on the beach, had ice cream together, and even played a duet (Nooyi and White both are fond of music, and in this case he played the piano and she sang).
Prior to leaving Cape Cod, she told White, “Tell me whatever I need to do to keep you, and I will. ”83 Ultimately White decided to remain at PepsiCo as CEO of PepsiCo International as well as vice chairman of PepsiCo. 84 At a meeting announcing Nooyi’s appointment, Nooyi told employees, “I treat Mike as my partner.
He could easily have been CEO. White said, “I play the piano and Indra sings. ”85 In 2009 White retired from PepsiCo. 86 | Indra Nooyi skillfully expanded the CEO table when she assumed the reins at PepsiCo; by openly asking for help from other key executives and previous CEOs, she has ensured that she isn’t flying blind. | | | Nooyi excels at building alliances both inside and outside of PepsiCo. Given the breadth of her responsibilities, she decided to increase the team of top managers she works closely with to 29 (which is around double the size of the team before she became CEO).She has good relations with key decision makers around the world in both government and business. And she frequently consults with and seeks the advice of three former CEOs of PepsiCo, Stephen Reinemund, Roger Enrico, and Don Kendall, whom she considers her friends.
87 Nooyi also excels at gaining the support of PepsiCo’s employees. 88 She is down-to-earth, sincere, and genuine in her interactions with employees and also comfortable just being herself; she has been known to walk barefoot in the halls of PepsiCo on occasion and sometimes sings at gatherings.Celebrations for employees’ birthdays include a cake. Nooyi, as a mother of two daughters, also recognizes how employees’ families are affected by their work and what a great source of support families can be. 89 Of course Nooyi faces a number of challenges at PepsiCo as she strives to make the company more globally focused (and less focused on the United States), make more healthful food products, protect the natural environment, and look out for the well-being of employees in a roubled economy with rising prices for ingredients in PepsiCo’s products.
90 Her exceptional skills at building alliances and gaining support will help. As she indicates, “… you give the team of people a set of objectives and goals and get them all to buy into it, and they can move mountains. ”91| p. 581 Many powerful top managers focus on building alliances not only inside their organizations but also with individuals, groups, and organizations in the task and general environments on which their organizations depend for resources.
These individuals, groups, and organizations enter alliances with managers because doing so is in their best interests and they know they can count on the managers’ support when they need it. When managers build alliances, they need to be on their guard to ensure that everything is aboveboard, ethical, and legal. Political Strategies for Exercising PowerPolitically skilled managers not only understand, and can use, the five strategies to increase their power; they also appreciate strategies for exercising their power.These strategies generally focus on how managers can use their power unobtrusively.
92 When managers exercise power unobtrusively, other members of an organization may not be aware that the managers are using their power to influence them. They may think they support these managers for a variety of reasons: because they believe it is the rational or logical thing to do, because they believe doing so is in their own best interests, or because they believe the position or decision the managers are advocating is legitimate or appropriate.The unobtrusive use of power may sound devious, but managers typically use this strategy to bring about change and achieve organizational goals. Political strategies for exercising power to gain the support and concurrence of others include relying on objective information, bringing in an outside expert, controlling the agenda, and making everyone a winner (see Figure 17. 5). 93RELYING ON OBJECTIVE INFORMATION Managers require the support of others to achieve their goals, implement changes, and overcome opposition.One way for a manager to gain this support and overcome opposition is to rely on objective information that supports the manager’s initiatives. Reliance on objective information leads others to support the manager because of the facts; objective information causes others to believe that what the manager is proposing is the proper course of action.
By relying on objective information, politically skilled managers unobtrusively exercise their power to influence others.Take the case of Mary Callahan, vice president of Better Built Cabinets, a small cabinet company in the Southeast. Callahan is extremely influential in the company; practically every new initiative that she proposes to the president and owner of the company is implemented. Why is Callahan able to use her power in the company so effectively? Whenever she has an idea for a new initiative that she thinks the company might pursue, she and her subordinates begin by collecting objective information supporting the initiative.Recently Callahan decided that Better Built should develop a line of high-priced European-style kitchen cabinets. Before presenting her proposal to Better Built’s president, she compiled objective information showing that (1) there was strong unmet demand for these kinds of cabinets, (2) Better Built could manufacture them in its existing production facilities, and (3) the new line had the potential to increase Better Built’s sales by 20% while not detracting from sales of the company’s other cabinets.
Presented with this information, the president agreed to Callahan’s proposal. Moreover, the president and other members of Better Built whose cooperation was needed to implement the proposal supported it because they thought it would help Better Built gain a competitive advantage. Using objective information to support her position enabled Callahan to unobtrusively exercise her power and influence others to support her proposal. p. 582 Figure 17. 5 Political Strategies for Exercising Power|BRINGING IN AN OUTSIDE EXPERT Bringing in an outside expert to support a proposal or decision can, at times, provide managers with some of the same benefits that the use of objective information does.
It lends credibility to a manager’s initiatives and causes others to believe that what the manager is proposing is the appropriate or rational thing to do. Suppose Callahan had hired a consultant to evaluate whether her idea was a good one. The consultant reports back to the president that the new European-style cabinets are likely to fulfill Callahan’s promises and increase Better Built’s sales and profits.As with objective information, this information provided by an objective expert can lend a sense of legitimacy to Callahan’s proposal and allow her to unobtrusively exercise power to influence others.
Although you might think consultants and other outside experts are neutral or objective, they sometimes are hired by managers who want them to support a certain position or decision in an organization. For instance, when managers face strong opposition from others who fear that a decision will harm their interests, the managers may bring in an outside expert.They hope this expert will be perceived as a neutral observer to lend credibility and “objectivity” to their point of view. The support of an outside expert may cause others to believe that a decision is indeed the right one. Of course sometimes consultants and other outside experts actually are brought into organizations to be objective and guide managers on the appropriate course of action.
CONTROLLING THE AGENDA Managers also can exercise power unobtrusively by controlling the agenda—influencing which alternatives are considered or even whether a decision is made. 4 When managers influence the alternatives that are considered, they can make sure that each considered alternative is acceptable to them and that undesirable alternatives are not in the feasible set. In a hiring context, for example, managers can exert their power unobtrusively by ensuring that job candidates whom they do not find acceptable do not make their way onto the list of finalists for an open position. They do this by making sure that these candidates’ drawbacks or deficiencies are communicated to everyone involved in making the hiring decision.
When three finalists for an open position are discussed and evaluated in a hiring meeting, a manager may seem to exert little power or influence and just go along with what the rest of the group wants. However, the manager may have exerted power in the hiring process unobtrusively by controlling which candidates made it to the final stage. p.
583 Sometimes managers can prevent a decision from being made. A manager in charge of a community relations committee, for example, may not favor a proposal for the organization to become more involved in local youth groups such as the Boy Scouts and the Girl Scouts.The manager can exert influence in this situation by not including the proposal on the agenda for the committee’s next meeting. Alternatively, the manager could place the proposal at the end of the agenda for the meeting and feel confident that the committee will run out of time and not get to the last items on the agenda because that is what always happens. Either approach enables the manager to unobtrusively exercise power. Committee members do not perceive this manager as trying to influence them to turn down the proposal.Rather, the manager has madethe proposal into a nonissue that is not even considered.
MAKING EVERYONE A WINNER Often, politically skilled managers can exercise their power unobtrusively because they make sure that everyone whose support they need benefits personally from providing that support. By making everyone a winner, a manager can influence other organizational members because these members see supporting the manager as being in their best interest.When top managers turn around troubled companies, some organizational members and parts of the organization are bound to suffer due to restructurings that often entail painful layoffs.
However, the power of the turnaround CEO often accelerates as it becomes clear that the future of the company is on surer footing and the organization and its stakeholders are winners as a result of the change effort. Making everyone a winner not only is an effective way of exercising power but, when used consistently and forthrightly, can increase managers’ power and influence over time.That is, when a manager actually does make everyone a winner, all stakeholders will see it as in their best interests to support the manager and his or her initiatives.
When managers who make everyone a winner have strong ethical values, everyone really is a winner, as profiled in the following “Ethics in Action” box. | El Faro Benefits Multiple StakeholdersWhen Estuardo Porras was taking business classes at Pepperdine University in Malibu, California, in the 1990s, he was surprised to see the high prices that Starbucks charged for coffee. 5 In his native country of Guatemala, coffee used to be the major export until prices declined in the 1980s due to a large influx of low-cost coffee beans coming on the market from countries like Vietnam.
Porras had a vision of returning to Guatemala, resurrecting an old coffee plantation, and operating it in a socially responsible way that protected the natural environment, looked out for and contributed to the well-being of the workers who operated it and the local community, and produced high-quality coffee beans that a socially responsible organization like Starbucks would be interested in purchasing. 6| | Ethics in Action| Porras returned to Guatemala, borrowed $1. 25 million from his father, who had recently sold a Coca-Cola bottling company, and transformed an abandoned plantation called El Faro into a marvel of environmental sustainability, social responsibility, and effectiveness. 97El Faro protects the natural environment, helps a poor community, and produces high-quality arabica coffee used by specialty coffee companies like Starbucks.And because of Starbucks’ commitment to purchasing coffee beans from growers that abide by ethical social and environmental values, El Faro can sell all the coffee beans it grows that meet Starbucks’ standards for more than the beans would sell for on the general commodity export market.
98p. 584 El Faro is located near a volcano, and the ash from the volcano provides excellent soil for growing coffee. Coffee beans are fermented in recycled water, and the casings from the beans are eaten by earthworms, yielding an organic fertilizer.Much of the work on the plantation is done by hand. 99 El Faro supports a free elementary school for children in the local community and buses older children to a high school in the vicinity. Employees receive