Managing conflict, power, and politics

1. Managing conflict, power, and politics Danielle Fontaine, GopalKamalanathan, Matt Kenny, Rodrigo Natal, ThamaraSekhar, Yan Zhou

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

3. Pondy’s Model of Organizational Conflict

4. 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.

5. 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

6. 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

7. Which stage is represented here?

8. 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

9. 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

10. 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

11. 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

12. Managing Conflict: “Dual Concerns” Model

13. 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

14. Sources of Organizational Power

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. Costs/Benefits of Organizational Power

24. 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

25. 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

26. Questions?