1. Managing conflict, power, and politics
Danielle Fontaine, Gopal Kamalanathan, Matt Kenny, Rodrigo Natal, Thamara Sekhar, 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
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
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?