How Management Teams Can Have a Good Fight

1. How Management Teams Can Have a Good Fight Article AUTHors: Kathleen M. Eisenhardt Jean L. Kahwajy L.J. Bourgeois III Presented by: James Luttrell

2. Dr. Kathleen M. Eisenhardt Ph.D. – Stanford – 1982 Stanford Warren Ascherman Professorship in the school of Engineering Work centers on strategy and organization in technology-based and high-velocity industries

3. Dr. Jean L. Kahwajy Ph.D. – Stanford University – Engineering Mgmt. M.B.A. – Stanford University CEO of Effective Interactions – Consulting firm based in her communication and leadership theories

4. Dr. L. J. Bourgeois III Ph.D. – University of Washington B.S. and M.B.A. – Tulane University Associate Dean – University of Virginia – Darden School of Business Work centers on strategic planning and integration

5. Study Background • Reviewed interplay of conflict, politics and speed for 12 company management teams • 4 teams with no substantive disagreement • 4 teams that minimize interpersonal conflict • 4 teams with significant interpersonal conflict • Teams with minimized interpersonal conflict • Described coworkers as smart, team player and best in business • Teams with significant interpersonal conflict • Described coworkers as manipulative, secretive and political

6. Tactics for Managing Interpersonal Conflict Tactics Strategies Focus on the Facts Multiply the Alternatives Create Common Goals Use Humor Balance the Power Structure Seek Consensus with Qualification Focus on issues, not personalities Frame decisions as collaborations Establish a sense of fairness and equity

7. Focus on the Facts • Examine a wide variety of operating measures • Daily, Weekly and Monthly • Specific executives tasked with tracking data • Internal, competitors and technical advancements • Facts make debate substantive • Companies with significant conflict use hunches/guesses • Opinions cause people to become the focus of the conflict • Direct link between the use of facts and low conflict levels • Without facts, individual motives become suspect

8. Multiply the Alternatives • Brings managers together in substantive debate and creative process • Often results in an integration of multiple options • Diffuses conflict as alternatives become less black and white • Limited options causes conflict to turn personal • Employees become entrenched • Cannot shift position without losing face

9. Create Common Goals • Frame debate as collaborative not competitive • Creates shared interest in best collective solution • Minimizes rivalry and power grabs • Teams hobbled with conflict lack common goals • Frame decisions negatively as reaction to threat • Assign blame • Group decisions and intergroup conflict create: • Team cohesion • Shared interest in outcomes • Decreased sense of individual winners and losers

10. Use Humor • Relieves tension and promotes collaboration by making business fun • Both legitimate and contrived humor are effective • Lack of humor promotes hostility and stress • Humor works as a defense mechanism • Protects people from threatening situations • Blunts the edge of negative information • Allows sending of serious messages without appearing to do so

11. Balance the Power Structure Fair process promotes decision acceptance without resentment Unfair process promotes ill will and conflict The CEO has the most overall power and each manager wields the most power within their area of responsibility Autocratic leadership and power vacuums both lead to high levels of conflict Psychological research shows democratic leaders engender interest and significant collaboration Imbalanced power structures result in verbal aggression

12. Seek Consensus with Qualification • Step 1: Executives discuss issues to reach consensus • Step2: Make the strategic decision • Consensus was reached: Use consensus approach • Consensus not reached: Most relevant senior manager decides • Provides comfort as managers have a voice in the process • Assumes conflict is natural, not a sign of dysfunction • Teams forcing consensus have the most interpersonal conflict • Reduces timeliness of decisions • Adds significant cost to the process • Weakens support of the decision

13. Conflict, Speed and Performance • Conflict over issues is valuable • Larger range of information • Deeper understanding of issues • Richer set of solutions • Without conflict, managers become withdrawn • Low-conflict teams forget to consider key issues or are unaware of important aspects • Successful strategic decisions arise from active promotion of broad conflict

14. Performance and Consensus Reference Article • Rated the interaction of: • Agreement/Disagreement on means (competitive strategies) • Agreement/Disagreement on ends (goals) • Financial Peformance • Study Characteristics: • Executive management teams of 12 non-diversified firms included • Interviews with the CEO conducted to determine the members of the management team • 71 questionnaires administered with 67 usable responses

15. Performance and Consensus Reference Article Hypothesis Conclusion

16. Building a Fighting Team Build a heterogeneous team diverse in age, gender, background and experience Meet as a team regularly and often Encourage team members to assume roles beyond obvious responsibilities Apply multiple mind-sets to any issue Actively manage conflict

17. Top Management-Team Diversity and Firm Performance: Examining the Role of CognitionsReference Article • Study Characteristics: • 159 European Managers from 14 countries • More than 20 people each in marketing, R&D, manufacturing and general management • Four Hypotheses • The higher demographic diversity of the management team, the higher the cognitive diversity in decision making. • The higher the interpretive ambiguity within the team, the higher the subsequent performance. • The higher the management team disagreement concerning basic processes, the lower the firm performance. • Increases in firm performance decrease team cognitive diversity.

18. Top Management-Team Diversity and Firm Performance: Examining the Role of CognitionsReference Article • Study Results: • Hypothesis 1 – Not confirmed. No significant relationship between demographic diversity and cognitive diversity. • Hypothesis 2 – Confirmed. Significant relationship between interpretive ambiguity and performance. Significant relationship between age diversity and performance. • Hypothesis 3 – Not confirmed. Team disagreement did not significantly effect firm performance. • Hypothesis 4 – Confirmed. Increased performance over time negatively relates to cognitive diversity.

19. Ethics of Interpersonal Conflict ManagementReference Article • Five Styles of Managing Interpersonal Conflict • Integrating • High concern for self and others • Use skills and information from multiple parties • Solution is acceptable to all parties • Obliging • Low concern for self and high concern for others • Neglect his or her own concern to satisfy the other party • Primarily done in exchange for later concessions

20. Ethics of Interpersonal Conflict ManagementReference Article • Dominating • High concern for self and low concern for others • Used to enforce authoritarian decisions • Avoiding • Low concern for self and others • Used primarily for tactical and minor issues • Compromising • Intermediate concern for self and others • Splitting the difference or exchanging concessions • Used when goals are mutually exclusive or when parties are equally powerful

21. Conclusion Any Questions?

22. References Bourgeois, III, L.J. "Performance and Consensus.“ Strategic Management Journal. 1. (1980): 227-248. Eisendhardt, Kathleen M., Jean L. Kahwajy, and L. J. Bourgeois, III. "How Management Teams Can Have a Good Fight." Harvard Business Review. (1997): 77-85. Kilduff, Martin, ReinhardAngelmar, and Ajay Mehra. "Top Management-Team Diversity and Firm Performance: Examining the Role of Cognitions." Organization Science. 11.1 (2000): 21-34. Rahim, M. Alfazur, Jan Edward Garrett, and Gabriel F. Buntzman. "Ethics of Managing Interpersonal Conflict in Organizations." Journal of Business Ethics. 11. (1992): 423-432.