“That’s true,” said Dan, “but his references all check out. In fact, he‘s been described as a rising star, aggressive, productive.
He’s just what we need to help us explore new opportunities.”
Another partner responded, “A friend of mine worked with Mike a while back and said that while he is definitely good, he’s
a real maverick––in terms of both investment philosophy and lifestyle. Is that what we really want at EPI?”
Throughout the discussion, Dan defended Mike’s work record. He repeatedly pointed out Mike’s impressive performance.
He deflected concerns about Mike’s reputation by saying that he was a loyal and trusted friend. Largely on Dan’s
recommendation, the other partners agreed, although somewhat reluctantly, to hire Mike. When Dan offered Mike the job, he
promised Mike the freedom and flexibility to operate a segment of the fund as he desired.
Mike took the job and performed his responsibilities at EPI in a superior manner. Indeed, he was largely responsible for
increasing the managed assets of the company by 150 percent. However, this increase came at a price. From the day Mike
moved in, junior analysts enjoyed working with him very much. They liked his fresh, new approach, and were encouraged
by the spectacular results. This caused jealousy among the other partners, who thought Mike was pushing too hard to change
the tried–and–true traditions of the firm. It was not uncommon for sharp disagreements to erupt in staff meetings, with one
or another partner coming close to storming out of the room. Throughout this time, Dan tried to soothe ruffled feathers and
maintain an atmosphere of trust and loyalty.
Mike seemed oblivious to all the turmoil he was causing. He was optimistic about potential growth opportunities. He
believed that voice–activated technology, 3–D printing, and cloud databases were the “waves of the future.” Because of this
belief, he wanted to direct the focus of his portfolio toward these emerging technologies. “Investments in small firm stocks in
these industries, coupled with an aggressive market timing strategy, should yield a 50 percent increase in performance.” He
rallied support for this idea not only among the younger members of EPI, but also with the pension fund managers who
invested with EPI. Mike championed his position and openly questioned the traditional philosophy. “We should compromise
on conservatism and achieve some real growth while we can,” Mike argued. “If we don’t, we’ll lose the investors’ confidence
and ultimately lose them.“
Most of the senior partners disagreed with Mike, stating that the majority of their investors emphasized security above all
else. They also disagreed with the projected profits, stating that “We could go from 8 to 12 percent return on investment
(ROI); then again, we could drop to 4 percent. A lot depends on whose data you use.” They reminded Mike, “The
fundamental approach of the corporation is to provide safe and moderate–income mutual funds for academic pension funds
to invest in. That’s the philosophy we used to solicit the investments originally, and that’s the approach we are obligated to
maintain.”
Months passed, and dissension among the managers grew. Mike began to criticize his detractors openly as he talked with
younger EPI employees. In addition, he assigned research department employees to focus on high–tech investments,
distracting them from investigating more traditional investments. This disrupted the operations of other EPI managers
because their funds relied on timely input from the researchers and other support staff. Amidst a rapidly spreading
undercurrent of tension, one of the founding partners, Tom Watson, approached Dan one day. Conservative in his ways,
Watson was the partner who walks the office and always has time to stop and chat. He began the conversation.
“Dan, I speak for most of the senior staff when I say that we are very troubled by Mike’s approach. We’ve expressed ourselves
well enough for Mike to understand, but his actions defy everything we’ve said. He’s a catastrophe just waiting to happen.”
“I can understand your concern, Tom,” replied Dan. “I’m troubled, too. We have an opportunity to attract new business with
some of Mike’s new ideas. And the younger staff love working on his projects. But he has stirred up a lot of turmoil.”
Tom agreed. “The real issue is that EPI is no longer presenting a unified image. Mike is willfully defying the stated objectives
of our organization. And some of our oldest clients don’t like that.“
“That’s true, Tom. On the other hand, some of our newer clients are really encouraged by Mike’s approach––and his track
record is extremely impressive.”
“Come on, Dan. You and I both know that many experts feel the market is overheating. Mike’s paper profits could quickly be
incinerated if the budget and trade deficits don‘t turn around. We can’t stake the reputation of the firm on a few high–flying
technology stocks. Dan, the other senior partners agree. Mike must either conform to the philosophy and management
practices of this organization or else resign.”
Reflecting on the situation, Dan realized he faced the most difficult challenge of his career. He felt a strong personal
investment in helping Mike succeed. Not only had he hired Mike over the objections of several colleagues; he had personally
helped him “learn the ropes” at EPI. Beyond that, Dan was haunted by his promise to Mike that he would have the freedom
and flexibility to perform the requirements of the position as he pleased. However, this flexibility had clearly caused
problems within EPI.
Finally, bowing to the pressure of his peers, Dan called Mike in for a meeting, hoping to find some basis for compromise.
Their conversation proceeded as follows:
38
DAN: I gather you know the kinds of concerns the senior partners have expressed regarding your approach.
MIKE: I guess you’ve talked with Tom. Well, we did have a small disagreement earlier this week.
DAN: The way Tom tells it, you’re willfully defying corporate objectives and being insubordinate.
MIKE: Well, it’s just like Watson to see progressive change as an attempt to take away his power.
DAN: It’s not quite that simple, Mike. When we founded EPI, we all agreed that a conservative stance was best. And right
now, with the economic indicators looking soft, many experts agree that it may still be the best alternative.
MIKE: Dan, what are you going to rely on––predictions or performance? These concerns are just smokescreens to deflect
attention away from the sub–par records of other portfolio managers. Old views need to be challenged and ultimately
discarded. How else are we going to progress and keep up with our competitors?
DAN: I agree we need to change, Mike––but gradually. You have great ideas and terrific instincts, but you can’t change a
30–year–old firm overnight. You can help me promote change, but you’re pushing so fast, others are digging in their heels.
The rate of change is just as important as the direction.
MIKE: You’re telling me. And at this rate, it doesn’t make much difference which direction we’re headed in.
DAN: Come on, Mike. Don’t be so cynical. If you’d just stop rubbing people’s noses in your performance record and try to see
things from their perspective, we could calm things down around here. Then maybe we could start building consensus.
Mike’s emotions betray his impatience with the pace of the organization; he becomes agitated.
MIKE: I’ve always admired your judgment, and I value your friendship, but I honestly think you’re kidding yourself. You
seem to think you can get this firm to look like it’s progressive––shrugging off its stodgy image––without taking any risks or
ruffling any feathers. Are you interested in appearance or substance? If you want appearance, then hire a good PR person. If
you want substance, then back me up and we’ll rewrite the record book. Get off the fence, Dan, before your butt’s full of
slivers.
DAN: Mike, it simply isn’t that easy. I’m not EPI, I’m simply its caretaker. You know we make decisions around here by
consensus; that’s the backbone of this organization. To move ahead, the confidence of the others has to be won, especially the
confidence of the seniors. Frankly, your reputation as a maverick makes it hard to foster confidence in, and loyalty to, your
plans.
MIKE: You knew my style when you hired me. Remember how you made it a point to promise me flexibility and autonomy?
I’m not getting that any more, Dan. All I’m getting is grief, even though I‘m running circles around your conservative cronies.
DAN: Well, that may be true. But your flamboyance
MIKE: Oh, yeah. The sports car, the singles lifestyle, the messy office. But, again, that’s appearance, Dan, not substance.
Performance is what counts. That’s what got me this far, and that‘s my ticket out. You know I could walk into any firm in
town and write my own plan.
DAN: Well, there’s no reason to be hasty.
MIKE: Do you honestly believe this can be salvaged? I think not. Maybe it’s time for me to be moving on. Isn’t that why you
called me in here anyway?
Dan, feeling uncomfortable, breaks eye contact and shifts his gaze to the New York skyline. After a long pause, he continues, still gazing
out of the window.
DAN: I don’t know, Mike. I feel I’ve failed. My grand experiment in change has polarized the office; we’ve got two armies at
war out there. On the other hand, you really have done a good job here. EPI will no doubt lose a good part of its customer
base if you leave. You have a loyal following, with both customers and staff. If you go, so do they––along with our shot at
changing our image.
MIKE: It’s just like you, Dan, to take this problem personally. Blast it, you take everything personally. Even when I beat you
at racquetball. Your heart‘s in the right place––you just can’t ever seem to make the cutthroat hit. You know and I know that
EPI needs a change in image. But it doesn’t appear to be ready for it yet. And I’m certainly not willing to move slowly.
DAN: Yeah. Maybe. It’s just hard to give up [long pause]. Well, why don’t we talk more about this after the reception tonight?
Come on over and see Joanie and the kids. Besides, I’m dying to show off my new boat.
MIKE: What you see in sailing is beyond me. It’s a waste of time, lazily drifting on gentle breezes.
DAN: Save it for later, “Speed King.” I’ve got to get ready for tonight.
86)
What situational factors should Dan take into account as he considers his approach to managing this conflict?
39
87)
Describe an example (real or fictional) of forcing as a conflict management approach. Diagnose whether the use
of forcing was appropriate to the situation and, if not, what approach would have been preferable.
Educational Pension Investments
Educational Pension Investments (EPI), located in New York, invests pension funds for educational institutions. It employs
approximately 75 people, 25 of whom are responsible for actual investment activities. The company manages about $5 billion of assets
and derived an income of about $10 million.
The firm was incorporated almost 30 years ago by a group of academic professionals who wanted to control the destiny of
their retirement years by pursuing investments that would be consistent and safe. The firm has weathered rapid
technological change and economic volatility. Leadership has consistently resisted opportunities to “make it big” and instead
stayed with less profitable but relatively secure investments.
Dan Richardson has an MBA from Wharton and is one of the founders of EPI. He started out working in the research
department and has worked in every department since then. The other partners, comfortable with Dan’s conservative yet
flexible nature, elected him to the position of CEO 13 years ago. After that, Dan became known as “the great equalizer.” He
works hard to make sure that all the partners are included in decisions. Over the years, he has become the confidant of the
other seniors and the mentor of the next generation. EPI’s employees look to Dan for leadership and direction. Dan’s
management philosophy is built on the concept of loyalty. As he is fond of saying, “My dad was a small town banker. He told
me, ‘Look out for the other guys and they’ll look out for you.’ Sounds corny, I know, but I firmly believe in this philosophy.”
Given Dan’s practice of consistent and safe investing, EPI’s growth has not kept pace with other investment opportunities. As
a result, Dan has reluctantly begun to consider the merits of a more aggressive investment approach. Part of Dan’s
reconsideration is that several of the younger analysts are beginning to refer to EPI as “stodgy.” Some are leaving EPI for
positions in more aggressive firms.
One evening, Dan talked about his concern with his racquetball partner and longtime friend, Mike Roth. Mike also happened
to be an investment broker in another firm. An MBA graduate from the University of Illinois, Mike’s accomplishments in
research had brought him widespread recognition. Everyone respected him for his knowledge, his work ethic, and his
uncanny ability to predict trends.
When Mike heard Dan’s concerns about EPI’s image and need for an aggressive approach, he suggested to his friend that
what EPI needed was some fresh blood, someone who could infuse enthusiasm into the organization––someone like him. He
told Dan, “I can help you get things moving. In fact, I‘ve been developing some concepts that would be perfect for EPI.”
Dan brought up the idea of hiring Mike at the next staff meeting, but the idea was met with caution and skepticism. “Sure,
he’s had a brilliant career on paper,” said one senior partner. “But he’s never stayed in one place long enough to really
validate his success. Look at his résumé. During the past seven years, he’s been with four different firms, in four different
positions.”
“That’s true,” said Dan, “but his references all check out. In fact, he‘s been described as a rising star, aggressive, productive.
He’s just what we need to help us explore new opportunities.”
Another partner responded, “A friend of mine worked with Mike a while back and said that while he is definitely good, he’s
a real maverick––in terms of both investment philosophy and lifestyle. Is that what we really want at EPI?”
Throughout the discussion, Dan defended Mike’s work record. He repeatedly pointed out Mike’s impressive performance.
He deflected concerns about Mike’s reputation by saying that he was a loyal and trusted friend. Largely on Dan’s
recommendation, the other partners agreed, although somewhat reluctantly, to hire Mike. When Dan offered Mike the job, he
promised Mike the freedom and flexibility to operate a segment of the fund as he desired.
Mike took the job and performed his responsibilities at EPI in a superior manner. Indeed, he was largely responsible for
increasing the managed assets of the company by 150 percent. However, this increase came at a price. From the day Mike
moved in, junior analysts enjoyed working with him very much. They liked his fresh, new approach, and were encouraged
by the spectacular results. This caused jealousy among the other partners, who thought Mike was pushing too hard to change
the tried–and–true traditions of the firm. It was not uncommon for sharp disagreements to erupt in staff meetings, with one
or another partner coming close to storming out of the room. Throughout this time, Dan tried to soothe ruffled feathers and
maintain an atmosphere of trust and loyalty.
Mike seemed oblivious to all the turmoil he was causing. He was optimistic about potential growth opportunities. He
40
believed that voice–activated technology, 3–D printing, and cloud databases were the “waves of the future.” Because of this
belief, he wanted to direct the focus of his portfolio toward these emerging technologies. “Investments in small firm stocks in
these industries, coupled with an aggressive market timing strategy, should yield a 50 percent increase in performance.” He
rallied support for this idea not only among the younger members of EPI, but also with the pension fund managers who
invested with EPI. Mike championed his position and openly questioned the traditional philosophy. “We should compromise
on conservatism and achieve some real growth while we can,” Mike argued. “If we don’t, we’ll lose the investors’ confidence
and ultimately lose them.“
Most of the senior partners disagreed with Mike, stating that the majority of their investors emphasized security above all
else. They also disagreed with the projected profits, stating that “We could go from 8 to 12 percent return on investment
(ROI); then again, we could drop to 4 percent. A lot depends on whose data you use.” They reminded Mike, “The
fundamental approach of the corporation is to provide safe and moderate–income mutual funds for academic pension funds
to invest in. That’s the philosophy we used to solicit the investments originally, and that’s the approach we are obligated to
maintain.”
Months passed, and dissension among the managers grew. Mike began to criticize his detractors openly as he talked with
younger EPI employees. In addition, he assigned research department employees to focus on high–tech investments,
distracting them from investigating more traditional investments. This disrupted the operations of other EPI managers
because their funds relied on timely input from the researchers and other support staff. Amidst a rapidly spreading
undercurrent of tension, one of the founding partners, Tom Watson, approached Dan one day. Conservative in his ways,
Watson was the partner who walks the office and always has time to stop and chat. He began the conversation.
“Dan, I speak for most of the senior staff when I say that we are very troubled by Mike’s approach. We’ve expressed ourselves
well enough for Mike to understand, but his actions defy everything we’ve said. He’s a catastrophe just waiting to happen.”
“I can understand your concern, Tom,” replied Dan. “I’m troubled, too. We have an opportunity to attract new business with
some of Mike’s new ideas. And the younger staff love working on his projects. But he has stirred up a lot of turmoil.”
Tom agreed. “The real issue is that EPI is no longer presenting a unified image. Mike is willfully defying the stated objectives
of our organization. And some of our oldest clients don’t like that.“
“That’s true, Tom. On the other hand, some of our newer clients are really encouraged by Mike’s approach––and his track
record is extremely impressive.”
“Come on, Dan. You and I both know that many experts feel the market is overheating. Mike’s paper profits could quickly be
incinerated if the budget and trade deficits don‘t turn around. We can’t stake the reputation of the firm on a few high–flying
technology stocks. Dan, the other senior partners agree. Mike must either conform to the philosophy and management
practices of this organization or else resign.”
Reflecting on the situation, Dan realized he faced the most difficult challenge of his career. He felt a strong personal
investment in helping Mike succeed. Not only had he hired Mike over the objections of several colleagues; he had personally
helped him “learn the ropes” at EPI. Beyond that, Dan was haunted by his promise to Mike that he would have the freedom
and flexibility to perform the requirements of the position as he pleased. However, this flexibility had clearly caused
problems within EPI.
Finally, bowing to the pressure of his peers, Dan called Mike in for a meeting, hoping to find some basis for compromise.
Their conversation proceeded as follows:
DAN: I gather you know the kinds of concerns the senior partners have expressed regarding your approach.
MIKE: I guess you’ve talked with Tom. Well, we did have a small disagreement earlier this week.
DAN: The way Tom tells it, you’re willfully defying corporate objectives and being insubordinate.
MIKE: Well, it’s just like Watson to see progressive change as an attempt to take away his power.
DAN: It’s not quite that simple, Mike. When we founded EPI, we all agreed that a conservative stance was best. And right
now, with the economic indicators looking soft, many experts agree that it may still be the best alternative.
MIKE: Dan, what are you going to rely on––predictions or performance? These concerns are just smokescreens to deflect
attention away from the sub–par records of other portfolio managers. Old views need to be challenged and ultimately
discarded. How else are we going to progress and keep up with our competitors?
DAN: I agree we need to change, Mike––but gradually. You have great ideas and terrific instincts, but you can’t change a
30–year–old firm overnight. You can help me promote change, but you’re pushing so fast, others are digging in their heels.
The rate of change is just as important as the direction.
MIKE: You’re telling me. And at this rate, it doesn’t make much difference which direction we’re headed in.
DAN: Come on, Mike. Don’t be so cynical. If you’d just stop rubbing people’s noses in your performance record and try to see
things from their perspective, we could calm things down around here. Then maybe we could start building consensus.
Mike’s emotions betray his impatience with the pace of the organization; he becomes agitated.
41
MIKE: I’ve always admired your judgment, and I value your friendship, but I honestly think you’re kidding yourself. You
seem to think you can get this firm to look like it’s progressive––shrugging off its stodgy image––without taking any risks or
ruffling any feathers. Are you interested in appearance or substance? If you want appearance, then hire a good PR person. If
you want substance, then back me up and we’ll rewrite the record book. Get off the fence, Dan, before your butt’s full of
slivers.
DAN: Mike, it simply isn’t that easy. I’m not EPI, I’m simply its caretaker. You know we make decisions around here by
consensus; that’s the backbone of this organization. To move ahead, the confidence of the others has to be won, especially the
confidence of the seniors. Frankly, your reputation as a maverick makes it hard to foster confidence in, and loyalty to, your
plans.
MIKE: You knew my style when you hired me. Remember how you made it a point to promise me flexibility and autonomy?
I’m not getting that any more, Dan. All I’m getting is grief, even though I‘m running circles around your conservative cronies.
DAN: Well, that may be true. But your flamboyance
MIKE: Oh, yeah. The sports car, the singles lifestyle, the messy office. But, again, that’s appearance, Dan, not substance.
Performance is what counts. That’s what got me this far, and that‘s my ticket out. You know I could walk into any firm in
town and write my own plan.
DAN: Well, there’s no reason to be hasty.
MIKE: Do you honestly believe this can be salvaged? I think not. Maybe it’s time for me to be moving on. Isn’t that why you
called me in here anyway?
Dan, feeling uncomfortable, breaks eye contact and shifts his gaze to the New York skyline. After a long pause, he continues, still gazing
out of the window.
DAN: I don’t know, Mike. I feel I’ve failed. My grand experiment in change has polarized the office; we’ve got two armies at
war out there. On the other hand, you really have done a good job here. EPI will no doubt lose a good part of its customer
base if you leave. You have a loyal following, with both customers and staff. If you go, so do they––along with our shot at
changing our image.
MIKE: It’s just like you, Dan, to take this problem personally. Blast it, you take everything personally. Even when I beat you
at racquetball. Your heart‘s in the right place––you just can’t ever seem to make the cutthroat hit. You know and I know that
EPI needs a change in image. But it doesn’t appear to be ready for it yet. And I’m certainly not willing to move slowly.
DAN: Yeah. Maybe. It’s just hard to give up [long pause]. Well, why don’t we talk more about this after the reception tonight?
Come on over and see Joanie and the kids. Besides, I’m dying to show off my new boat.
MIKE: What you see in sailing is beyond me. It’s a waste of time, lazily drifting on gentle breezes.
DAN: Save it for later, “Speed King.” I’ve got to get ready for tonight.
88)
What are the sources of conflict in this case?
89)
Describe an example (real or fictional) of compromising as a conflict management approach. Diagnose whether
the use of compromising was appropriate to the situation and, if not, what approach would have been
preferable.
Mini–Case: The In–Box Is Full. Returning from a wonderful vacation at Disney World, “It’s a small world after all,” you go
through the memos that have been stuffed in your box. A short scenario of each memo is provided. Situation 1: The workers
down in the yard are refusing to wear their hard hats. OSHA visits tomorrow.
Situation 2: The people in the back room would like to play their radios while they work. Their supervisor has no problem
with it. The issue appears whether it is rock or country.
Situation 3: Your boss must leave town and will be unable to give a speech to his daughter’s fourth–grade class on “What I do
for a living.” He has asked you to take his place.
Situation 4: Production has informed your salespeople that they don’t think they can meet the orders requested. They must
know tomorrow what the priority should be. You have a meeting with your sales force at 9:00 a.m. tomorrow.
Situation 5: You have a performance review scheduled for George tomorrow. His performance has slipped but he says he
needs to talk to you.
90)
Indicate the conflict approach that would work best for each of the five situations described in The In–Box Is
Full. Provide support for your answer.
91)
Explain the four types of interpersonal conflicts and provide an appropriate workplace example for each.
Educational Pension Investments
Educational Pension Investments (EPI), located in New York, invests pension funds for educational institutions. It employs
approximately 75 people, 25 of whom are responsible for actual investment activities. The company manages about $5 billion of assets
and derived an income of about $10 million.
The firm was incorporated almost 30 years ago by a group of academic professionals who wanted to control the destiny of
their retirement years by pursuing investments that would be consistent and safe. The firm has weathered rapid
technological change and economic volatility. Leadership has consistently resisted opportunities to “make it big” and instead
stayed with less profitable but relatively secure investments.
Dan Richardson has an MBA from Wharton and is one of the founders of EPI. He started out working in the research
department and has worked in every department since then. The other partners, comfortable with Dan’s conservative yet
flexible nature, elected him to the position of CEO 13 years ago. After that, Dan became known as “the great equalizer.” He
works hard to make sure that all the partners are included in decisions. Over the years, he has become the confidant of the
other seniors and the mentor of the next generation. EPI’s employees look to Dan for leadership and direction. Dan’s
management philosophy is built on the concept of loyalty. As he is fond of saying, “My dad was a small town banker. He told
me, ‘Look out for the other guys and they’ll look out for you.’ Sounds corny, I know, but I firmly believe in this philosophy.”
Given Dan’s practice of consistent and safe investing, EPI’s growth has not kept pace with other investment opportunities. As
a result, Dan has reluctantly begun to consider the merits of a more aggressive investment approach. Part of Dan’s
reconsideration is that several of the younger analysts are beginning to refer to EPI as “stodgy.” Some are leaving EPI for
positions in more aggressive firms.
One evening, Dan talked about his concern with his racquetball partner and longtime friend, Mike Roth. Mike also happened
to be an investment broker in another firm. An MBA graduate from the University of Illinois, Mike’s accomplishments in
research had brought him widespread recognition. Everyone respected him for his knowledge, his work ethic, and his
43
uncanny ability to predict trends.
When Mike heard Dan’s concerns about EPI’s image and need for an aggressive approach, he suggested to his friend that
what EPI needed was some fresh blood, someone who could infuse enthusiasm into the organization––someone like him. He
told Dan, “I can help you get things moving. In fact, I‘ve been developing some concepts that would be perfect for EPI.”
Dan brought up the idea of hiring Mike at the next staff meeting, but the idea was met with caution and skepticism. “Sure,
he’s had a brilliant career on paper,” said one senior partner. “But he’s never stayed in one place long enough to really
validate his success. Look at his résumé. During the past seven years, he’s been with four different firms, in four different
positions.”
“That’s true,” said Dan, “but his references all check out. In fact, he‘s been described as a rising star, aggressive, productive.
He’s just what we need to help us explore new opportunities.”
Another partner responded, “A friend of mine worked with Mike a while back and said that while he is definitely good, he’s
a real maverick––in terms of both investment philosophy and lifestyle. Is that what we really want at EPI?”
Throughout the discussion, Dan defended Mike’s work record. He repeatedly pointed out Mike’s impressive performance.
He deflected concerns about Mike’s reputation by saying that he was a loyal and trusted friend. Largely on Dan’s
recommendation, the other partners agreed, although somewhat reluctantly, to hire Mike. When Dan offered Mike the job, he
promised Mike the freedom and flexibility to operate a segment of the fund as he desired.
Mike took the job and performed his responsibilities at EPI in a superior manner. Indeed, he was largely responsible for
increasing the managed assets of the company by 150 percent. However, this increase came at a price. From the day Mike
moved in, junior analysts enjoyed working with him very much. They liked his fresh, new approach, and were encouraged
by the spectacular results. This caused jealousy among the other partners, who thought Mike was pushing too hard to change
the tried–and–true traditions of the firm. It was not uncommon for sharp disagreements to erupt in staff meetings, with one
or another partner coming close to storming out of the room. Throughout this time, Dan tried to soothe ruffled feathers and
maintain an atmosphere of trust and loyalty.
Mike seemed oblivious to all the turmoil he was causing. He was optimistic about potential growth opportunities. He
believed that voice–activated technology, 3–D printing, and cloud databases were the “waves of the future.” Because of this
belief, he wanted to direct the focus of his portfolio toward these emerging technologies. “Investments in small firm stocks in
these industries, coupled with an aggressive market timing strategy, should yield a 50 percent increase in performance.” He
rallied support for this idea not only among the younger members of EPI, but also with the pension fund managers who
invested with EPI. Mike championed his position and openly questioned the traditional philosophy. “We should compromise
on conservatism and achieve some real growth while we can,” Mike argued. “If we don’t, we’ll lose the investors’ confidence
and ultimately lose them.“
Most of the senior partners disagreed with Mike, stating that the majority of their investors emphasized security above all
else. They also disagreed with the projected profits, stating that “We could go from 8 to 12 percent return on investment
(ROI); then again, we could drop to 4 percent. A lot depends on whose data you use.” They reminded Mike, “The
fundamental approach of the corporation is to provide safe and moderate–income mutual funds for academic pension funds
to invest in. That’s the philosophy we used to solicit the investments originally, and that’s the approach we are obligated to
maintain.”
Months passed, and dissension among the managers grew. Mike began to criticize his detractors openly as he talked with
younger EPI employees. In addition, he assigned research department employees to focus on high–tech investments,
distracting them from investigating more traditional investments. This disrupted the operations of other EPI managers
because their funds relied on timely input from the researchers and other support staff. Amidst a rapidly spreading
undercurrent of tension, one of the founding partners, Tom Watson, approached Dan one day. Conservative in his ways,
Watson was the partner who walks the office and always has time to stop and chat. He began the conversation.
“Dan, I speak for most of the senior staff when I say that we are very troubled by Mike’s approach. We’ve expressed ourselves
well enough for Mike to understand, but his actions defy everything we’ve said. He’s a catastrophe just waiting to happen.”
“I can understand your concern, Tom,” replied Dan. “I’m troubled, too. We have an opportunity to attract new business with
some of Mike’s new ideas. And the younger staff love working on his projects. But he has stirred up a lot of turmoil.”
Tom agreed. “The real issue is that EPI is no longer presenting a unified image. Mike is willfully defying the stated objectives
of our organization. And some of our oldest clients don’t like that.“
“That’s true, Tom. On the other hand, some of our newer clients are really encouraged by Mike’s approach––and his track
record is extremely impressive.”
“Come on, Dan. You and I both know that many experts feel the market is overheating. Mike’s paper profits could quickly be
incinerated if the budget and trade deficits don‘t turn around. We can’t stake the reputation of the firm on a few high–flying
technology stocks. Dan, the other senior partners agree. Mike must either conform to the philosophy and management
44
practices of this organization or else resign.”
Reflecting on the situation, Dan realized he faced the most difficult challenge of his career. He felt a strong personal
investment in helping Mike succeed. Not only had he hired Mike over the objections of several colleagues; he had personally
helped him “learn the ropes” at EPI. Beyond that, Dan was haunted by his promise to Mike that he would have the freedom
and flexibility to perform the requirements of the position as he pleased. However, this flexibility had clearly caused
problems within EPI.
Finally, bowing to the pressure of his peers, Dan called Mike in for a meeting, hoping to find some basis for compromise.
Their conversation proceeded as follows:
DAN: I gather you know the kinds of concerns the senior partners have expressed regarding your approach.
MIKE: I guess you’ve talked with Tom. Well, we did have a small disagreement earlier this week.
DAN: The way Tom tells it, you’re willfully defying corporate objectives and being insubordinate.
MIKE: Well, it’s just like Watson to see progressive change as an attempt to take away his power.
DAN: It’s not quite that simple, Mike. When we founded EPI, we all agreed that a conservative stance was best. And right
now, with the economic indicators looking soft, many experts agree that it may still be the best alternative.
MIKE: Dan, what are you going to rely on––predictions or performance? These concerns are just smokescreens to deflect
attention away from the sub–par records of other portfolio managers. Old views need to be challenged and ultimately
discarded. How else are we going to progress and keep up with our competitors?
DAN: I agree we need to change, Mike––but gradually. You have great ideas and terrific instincts, but you can’t change a
30–year–old firm overnight. You can help me promote change, but you’re pushing so fast, others are digging in their heels.
The rate of change is just as important as the direction.
MIKE: You’re telling me. And at this rate, it doesn’t make much difference which direction we’re headed in.
DAN: Come on, Mike. Don’t be so cynical. If you’d just stop rubbing people’s noses in your performance record and try to see
things from their perspective, we could calm things down around here. Then maybe we could start building consensus.
Mike’s emotions betray his impatience with the pace of the organization; he becomes agitated.
MIKE: I’ve always admired your judgment, and I value your friendship, but I honestly think you’re kidding yourself. You
seem to think you can get this firm to look like it’s progressive––shrugging off its stodgy image––without taking any risks or
ruffling any feathers. Are you interested in appearance or substance? If you want appearance, then hire a good PR person. If
you want substance, then back me up and we’ll rewrite the record book. Get off the fence, Dan, before your butt’s full of
slivers.
DAN: Mike, it simply isn’t that easy. I’m not EPI, I’m simply its caretaker. You know we make decisions around here by
consensus; that’s the backbone of this organization. To move ahead, the confidence of the others has to be won, especially the
confidence of the seniors. Frankly, your reputation as a maverick makes it hard to foster confidence in, and loyalty to, your
plans.
MIKE: You knew my style when you hired me. Remember how you made it a point to promise me flexibility and autonomy?
I’m not getting that any more, Dan. All I’m getting is grief, even though I‘m running circles around your conservative cronies.
DAN: Well, that may be true. But your flamboyance
MIKE: Oh, yeah. The sports car, the singles lifestyle, the messy office. But, again, that’s appearance, Dan, not substance.
Performance is what counts. That’s what got me this far, and that‘s my ticket out. You know I could walk into any firm in
town and write my own plan.
DAN: Well, there’s no reason to be hasty.
MIKE: Do you honestly believe this can be salvaged? I think not. Maybe it’s time for me to be moving on. Isn’t that why you
called me in here anyway?
Dan, feeling uncomfortable, breaks eye contact and shifts his gaze to the New York skyline. After a long pause, he continues, still gazing
out of the window.
DAN: I don’t know, Mike. I feel I’ve failed. My grand experiment in change has polarized the office; we’ve got two armies at
war out there. On the other hand, you really have done a good job here. EPI will no doubt lose a good part of its customer
base if you leave. You have a loyal following, with both customers and staff. If you go, so do they––along with our shot at
changing our image.
MIKE: It’s just like you, Dan, to take this problem personally. Blast it, you take everything personally. Even when I beat you
at racquetball. Your heart‘s in the right place––you just can’t ever seem to make the cutthroat hit. You know and I know that
EPI needs a change in image. But it doesn’t appear to be ready for it yet. And I’m certainly not willing to move slowly.
DAN: Yeah. Maybe. It’s just hard to give up [long pause]. Well, why don’t we talk more about this after the reception tonight?
Come on over and see Joanie and the kids. Besides, I’m dying to show off my new boat.
MIKE: What you see in sailing is beyond me. It’s a waste of time, lazily drifting on gentle breezes.
45
DAN: Save it for later, “Speed King.” I’ve got to get ready for tonight.
92)
What approaches to conflict management are used by the actors in this situation? How effective was each?
93)
Describe an example (real or fictional) of collaborating as a conflict management approach. Diagnose whether
the use of collaborating was appropriate to the situation and, if not, what approach would have been preferable.
Educational Pension Investments
Educational Pension Investments (EPI), located in New York, invests pension funds for educational institutions. It employs
approximately 75 people, 25 of whom are responsible for actual investment activities. The company manages about $5 billion of assets
and derived an income of about $10 million.
The firm was incorporated almost 30 years ago by a group of academic professionals who wanted to control the destiny of
their retirement years by pursuing investments that would be consistent and safe. The firm has weathered rapid
technological change and economic volatility. Leadership has consistently resisted opportunities to “make it big” and instead
stayed with less profitable but relatively secure investments.
Dan Richardson has an MBA from Wharton and is one of the founders of EPI. He started out working in the research
department and has worked in every department since then. The other partners, comfortable with Dan’s conservative yet
flexible nature, elected him to the position of CEO 13 years ago. After that, Dan became known as “the great equalizer.” He
works hard to make sure that all the partners are included in decisions. Over the years, he has become the confidant of the
other seniors and the mentor of the next generation. EPI’s employees look to Dan for leadership and direction. Dan’s
management philosophy is built on the concept of loyalty. As he is fond of saying, “My dad was a small town banker. He told
me, ‘Look out for the other guys and they’ll look out for you.’ Sounds corny, I know, but I firmly believe in this philosophy.”
Given Dan’s practice of consistent and safe investing, EPI’s growth has not kept pace with other investment opportunities. As
a result, Dan has reluctantly begun to consider the merits of a more aggressive investment approach. Part of Dan’s
reconsideration is that several of the younger analysts are beginning to refer to EPI as “stodgy.” Some are leaving EPI for
positions in more aggressive firms.
One evening, Dan talked about his concern with his racquetball partner and longtime friend, Mike Roth. Mike also happened
to be an investment broker in another firm. An MBA graduate from the University of Illinois, Mike’s accomplishments in
research had brought him widespread recognition. Everyone respected him for his knowledge, his work ethic, and his
uncanny ability to predict trends.
When Mike heard Dan’s concerns about EPI’s image and need for an aggressive approach, he suggested to his friend that
what EPI needed was some fresh blood, someone who could infuse enthusiasm into the organization––someone like him. He
told Dan, “I can help you get things moving. In fact, I‘ve been developing some concepts that would be perfect for EPI.”
Dan brought up the idea of hiring Mike at the next staff meeting, but the idea was met with caution and skepticism. “Sure,
he’s had a brilliant career on paper,” said one senior partner. “But he’s never stayed in one place long enough to really
validate his success. Look at his résumé. During the past seven years, he’s been with four different firms, in four different
positions.”
“That’s true,” said Dan, “but his references all check out. In fact, he‘s been described as a rising star, aggressive, productive.
He’s just what we need to help us explore new opportunities.”
Another partner responded, “A friend of mine worked with Mike a while back and said that while he is definitely good, he’s
a real maverick––in terms of both investment philosophy and lifestyle. Is that what we really want at EPI?”
Throughout the discussion, Dan defended Mike’s work record. He repeatedly pointed out Mike’s impressive performance.
He deflected concerns about Mike’s reputation by saying that he was a loyal and trusted friend. Largely on Dan’s
recommendation, the other partners agreed, although somewhat reluctantly, to hire Mike. When Dan offered Mike the job, he
promised Mike the freedom and flexibility to operate a segment of the fund as he desired.
Mike took the job and performed his responsibilities at EPI in a superior manner. Indeed, he was largely responsible for
increasing the managed assets of the company by 150 percent. However, this increase came at a price. From the day Mike
moved in, junior analysts enjoyed working with him very much. They liked his fresh, new approach, and were encouraged
46
by the spectacular results. This caused jealousy among the other partners, who thought Mike was pushing too hard to change
the tried–and–true traditions of the firm. It was not uncommon for sharp disagreements to erupt in staff meetings, with one
or another partner coming close to storming out of the room. Throughout this time, Dan tried to soothe ruffled feathers and
maintain an atmosphere of trust and loyalty.
Mike seemed oblivious to all the turmoil he was causing. He was optimistic about potential growth opportunities. He
believed that voice–activated technology, 3–D printing, and cloud databases were the “waves of the future.” Because of this
belief, he wanted to direct the focus of his portfolio toward these emerging technologies. “Investments in small firm stocks in
these industries, coupled with an aggressive market timing strategy, should yield a 50 percent increase in performance.” He
rallied support for this idea not only among the younger members of EPI, but also with the pension fund managers who
invested with EPI. Mike championed his position and openly questioned the traditional philosophy. “We should compromise
on conservatism and achieve some real growth while we can,” Mike argued. “If we don’t, we’ll lose the investors’ confidence
and ultimately lose them.“
Most of the senior partners disagreed with Mike, stating that the majority of their investors emphasized security above all
else. They also disagreed with the projected profits, stating that “We could go from 8 to 12 percent return on investment
(ROI); then again, we could drop to 4 percent. A lot depends on whose data you use.” They reminded Mike, “The
fundamental approach of the corporation is to provide safe and moderate–income mutual funds for academic pension funds
to invest in. That’s the philosophy we used to solicit the investments originally, and that’s the approach we are obligated to
maintain.”
Months passed, and dissension among the managers grew. Mike began to criticize his detractors openly as he talked with
younger EPI employees. In addition, he assigned research department employees to focus on high–tech investments,
distracting them from investigating more traditional investments. This disrupted the operations of other EPI managers
because their funds relied on timely input from the researchers and other support staff. Amidst a rapidly spreading
undercurrent of tension, one of the founding partners, Tom Watson, approached Dan one day. Conservative in his ways,
Watson was the partner who walks the office and always has time to stop and chat. He began the conversation.
“Dan, I speak for most of the senior staff when I say that we are very troubled by Mike’s approach. We’ve expressed ourselves
well enough for Mike to understand, but his actions defy everything we’ve said. He’s a catastrophe just waiting to happen.”
“I can understand your concern, Tom,” replied Dan. “I’m troubled, too. We have an opportunity to attract new business with
some of Mike’s new ideas. And the younger staff love working on his projects. But he has stirred up a lot of turmoil.”
Tom agreed. “The real issue is that EPI is no longer presenting a unified image. Mike is willfully defying the stated objectives
of our organization. And some of our oldest clients don’t like that.“
“That’s true, Tom. On the other hand, some of our newer clients are really encouraged by Mike’s approach––and his track
record is extremely impressive.”
“Come on, Dan. You and I both know that many experts feel the market is overheating. Mike’s paper profits could quickly be
incinerated if the budget and trade deficits don‘t turn around. We can’t stake the reputation of the firm on a few high–flying
technology stocks. Dan, the other senior partners agree. Mike must either conform to the philosophy and management
practices of this organization or else resign.”
Reflecting on the situation, Dan realized he faced the most difficult challenge of his career. He felt a strong personal
investment in helping Mike succeed. Not only had he hired Mike over the objections of several colleagues; he had personally
helped him “learn the ropes” at EPI. Beyond that, Dan was haunted by his promise to Mike that he would have the freedom
and flexibility to perform the requirements of the position as he pleased. However, this flexibility had clearly caused
problems within EPI.
Finally, bowing to the pressure of his peers, Dan called Mike in for a meeting, hoping to find some basis for compromise.
Their conversation proceeded as follows:
DAN: I gather you know the kinds of concerns the senior partners have expressed regarding your approach.
MIKE: I guess you’ve talked with Tom. Well, we did have a small disagreement earlier this week.
DAN: The way Tom tells it, you’re willfully defying corporate objectives and being insubordinate.
MIKE: Well, it’s just like Watson to see progressive change as an attempt to take away his power.
DAN: It’s not quite that simple, Mike. When we founded EPI, we all agreed that a conservative stance was best. And right
now, with the economic indicators looking soft, many experts agree that it may still be the best alternative.
MIKE: Dan, what are you going to rely on––predictions or performance? These concerns are just smokescreens to deflect
attention away from the sub–par records of other portfolio managers. Old views need to be challenged and ultimately
discarded. How else are we going to progress and keep up with our competitors?
DAN: I agree we need to change, Mike––but gradually. You have great ideas and terrific instincts, but you can’t change a
30–year–old firm overnight. You can help me promote change, but you’re pushing so fast, others are digging in their heels.
47
The rate of change is just as important as the direction.
MIKE: You’re telling me. And at this rate, it doesn’t make much difference which direction we’re headed in.
DAN: Come on, Mike. Don’t be so cynical. If you’d just stop rubbing people’s noses in your performance record and try to see
things from their perspective, we could calm things down around here. Then maybe we could start building consensus.
Mike’s emotions betray his impatience with the pace of the organization; he becomes agitated.
MIKE: I’ve always admired your judgment, and I value your friendship, but I honestly think you’re kidding yourself. You
seem to think you can get this firm to look like it’s progressive––shrugging off its stodgy image––without taking any risks or
ruffling any feathers. Are you interested in appearance or substance? If you want appearance, then hire a good PR person. If
you want substance, then back me up and we’ll rewrite the record book. Get off the fence, Dan, before your butt’s full of
slivers.
DAN: Mike, it simply isn’t that easy. I’m not EPI, I’m simply its caretaker. You know we make decisions around here by
consensus; that’s the backbone of this organization. To move ahead, the confidence of the others has to be won, especially the
confidence of the seniors. Frankly, your reputation as a maverick makes it hard to foster confidence in, and loyalty to, your
plans.
MIKE: You knew my style when you hired me. Remember how you made it a point to promise me flexibility and autonomy?
I’m not getting that any more, Dan. All I’m getting is grief, even though I‘m running circles around your conservative cronies.
DAN: Well, that may be true. But your flamboyance
MIKE: Oh, yeah. The sports car, the singles lifestyle, the messy office. But, again, that’s appearance, Dan, not substance.
Performance is what counts. That’s what got me this far, and that‘s my ticket out. You know I could walk into any firm in
town and write my own plan.
DAN: Well, there’s no reason to be hasty.
MIKE: Do you honestly believe this can be salvaged? I think not. Maybe it’s time for me to be moving on. Isn’t that why you
called me in here anyway?
Dan, feeling uncomfortable, breaks eye contact and shifts his gaze to the New York skyline. After a long pause, he continues, still gazing
out of the window.
DAN: I don’t know, Mike. I feel I’ve failed. My grand experiment in change has polarized the office; we’ve got two armies at
war out there. On the other hand, you really have done a good job here. EPI will no doubt lose a good part of its customer
base if you leave. You have a loyal following, with both customers and staff. If you go, so do they––along with our shot at
changing our image.
MIKE: It’s just like you, Dan, to take this problem personally. Blast it, you take everything personally. Even when I beat you
at racquetball. Your heart‘s in the right place––you just can’t ever seem to make the cutthroat hit. You know and I know that
EPI needs a change in image. But it doesn’t appear to be ready for it yet. And I’m certainly not willing to move slowly.
DAN: Yeah. Maybe. It’s just hard to give up [long pause]. Well, why don’t we talk more about this after the reception tonight?
Come on over and see Joanie and the kids. Besides, I’m dying to show off my new boat.
MIKE: What you see in sailing is beyond me. It’s a waste of time, lazily drifting on gentle breezes.
DAN: Save it for later, “Speed King.” I’ve got to get ready for tonight.
94)
Based on the behavioral guidelines for the collaborative approach, how could Dan have managed this conflict
more effectively?
95)
Pretend you are Dan. What would you do to identify the problem?
96)
Using the framework for the collaborative approach to problem solving, identify when a mediator should be
used. Explain the guidelines a mediator should use in mediating a problem.
Answer Key
Testname: C7
Answer Key
Testname: C7
57)
A
58)
59)
60)
61)
62)
63)
64)
65)
66)
67)
68)
69)
70)
71)
72)
73)
74)
75)
76)
77)
78)
79)
80)
81)
82)
83)
84)
51)
B
52)
A
53)
C
54)
A
55)
D
56)
C
Answer Key
Testname: C7
52
Answer Key
Testname: C7
53