PART THREE – SOCIAL AND GROUP PROCESSES IN
ORGANIZATIONS
Chapter Ten – Managing Conflict and Negotiating
Chapter Overview
Conflict is an inevitable result of interdependencies among people, workgroups, and organizations. Given
that all organizations are interdependent systems, organizations without conflict do not exist. Although
many people feel that conflict is inherently destructive, in fact some conflict is beneficial and desirable.
In the long run, conflict can lead to positive outcomes including better decisions, more motivated
employees, and happier customers. When it is well managed, conflict can improve problem solving and
innovation, increase employee involvement and commitment, and clarify work processes and goals. How
conflict is managed is the biggest determinant of whether a conflict has positive or negative outcomes.
Constructive change is typically the result of well-managed conflict. Negotiation is an important skill in
managing and resolving conflicts, as well as many other management activities, and is a part of all
managers’ jobs.
Chapter 10 begins with a focus on the nature of conflict, including common causes of conflict, conflict
escalation and de-escalating a conflict, and the role of emotion in conflict. The next portion of the chapter
looks at interpersonal conflict management strategies. Strategies include collaborating, compromising,
competing, accommodating and avoiding. The text then turns to the conflict process, including conflict
management skills and creating constructive conflict. The final portion of the chapter focuses on the
negotiation process, discussing negotiating skills, cultural issues in negotiations, and alternative dispute
resolutions.
Learning Outcomes
After studying this chapter, students should be able to:
1. Describe the nature of conflict, discuss the conflict escalation process, and describe how conflict
can be de-escalated.
2. Identify and discuss the five interpersonal conflict management strategies.
3. Describe some of the best and worst conflict resolution behaviors and discuss how to create
constructive conflict.
4. Describe the difference between distributive and integrative negotiation and identify the three
types of alternative dispute resolution.
Real World Challenge: Resolving Disputes at Marks & Spencer
Summary: Global clothing, home products and food retailer Marks & Spencer employs 82,000 people
around the world and has over 700 stores in the United Kingdom alone. Marks & Spencer wants to give
its employees the opportunity to find fair, mutually agreed upon, constructive solutions in a safe
environment and enable them to move forward after a conflict positively and confidently.
Real World Challenge: What advice would you give the management team of Marks & Spencer that
would enable their employees to find fair, mutually agreed upon, constructive solutions in a safe
environment and enable them to move forward after a conflict positively and confidently?
Real World Response: To accomplish these goals, Marks & Spencer decided to train a team of
accredited mediators to provide dispute resolution support to employees and to embed mediation and
informal dispute resolution in the company’s culture. By training a number of skilled mediators able to
promote and offer mediation as an alternative to traditional formal grievance processes, a healthier
conflict resolution culture developed at Marks & Spencer.
Chapter Outline
I. THE NATURE OF CONFLICT
Conflict is a disagreement that arises when two or more parties perceive a threat to their interests,
needs, or concerns.
Conflict can be both constructive and destructive.
One major conflict resolution expert argues that whether conflict is positive or negative is
determined by the parties’ response to the conflict rather than by the conflict itself.
Focusing on the conflict management process, not just the outcomes desired by the parties, is thus a
key to realizing the potential benefits of a conflict.
Behaviors that escalate a conflict until the conflict seems to take on a life of its own generate
dysfunctional conflict.
Dysfunctional conflicts focus on emotions and differences between the two parties and can
degenerate to the extent that the parties forget the substantive issues and focus on getting even,
retaliating, or even hurting the other party.
Dysfunctional conflict negatively influences employees, workgroups, and company performance. It
leads to feelings of contempt and at least one of the parties withdrawing from communicating.
Dysfunctional conflict often becomes separated from the initial issue and continues even after the
original conflict becomes irrelevant or is forgotten.
At the same time, though, conflict can also be positive. When effectively managed, conflict can be
healthy. Interpersonal conflict can lead to greater learning, flexibility, and creativity.
Behaviors that are adaptive and responsive to the situation, person, and issues create constructive
conflict. Constructive conflicts, also called functional conflicts, balance the interests of both parties
to maximize mutual gains and the attainment of mutual goals.
Constructive conflict is a natural, inevitable, and creative force, and can be beneficial to employees
and their organizations.
A. Common Causes of Conflict
What creates conflict? The short answer is that conflict can be caused by anything that leads to
a disagreement.
We next discuss nine of the most common sources of conflict in organizations. These are also
summarized in Table 10.1.
1. Differing Task Goals
Task conflict is a disagreement about the task or goals.
A moderate amount of task conflict is beneficial in the early stages of a project because it
increases innovation and generates more alternatives from which to choose. However, task
conflict is more likely to be detrimental over time when tasks are complex.
Task conflict can be very productive if handled correctly.
Compensation systems often create differing task goals within an organization. For
example, if marketing employees are compensated based on the number of units the
company sells but production employees are compensated based on the average cost per
unit, conflict between them is understandable.
Focusing employees, workgroups, and departments on a common enemy such as a
competitor can unite employees in their pursuit of a common goal and reduce the negative
effects of conflict.
2. Differing Process Goals
Even when we agree about what we are trying to accomplish, we can still disagree about
how we should accomplish it.
Process conflict reflects conflict about how to accomplish a task, who is responsible for
what, or how things should be delegated.
Role ambiguity increases process conflict.
3. Interpersonal Differences
Interpersonal differences are a common trigger of relationship conflict, which is the result
of incompatibility or differences between individuals or groups. It can also be triggered by
personality, particularly the personality traits of dogmatism and power motivation.
Relationship problems often fuel disputes and lead to an unnecessary escalating spiral of
dysfunctional conflict. This is rarely a good thing and consistently recognized as a primary
source of stress.
Relationship conflict is fueled primarily by emotions and by perceptions about the other
party’s personality, character, or motives. Because relationship conflict is personalized, it
tends to become more extreme.
Because relationship conflict is not about concrete issues, neither party is really interested
in solving the problem and may even try to create new problems.
Effective project teams tend to have low but increasing levels of process conflict, moderate
levels of task conflict in the middle of the project, and low levels of relationship conflict
that increase toward the end of the project.
Creating a culture of respect and supporting the safe and balanced expression of
perspectives and emotions can help to suppress relationship conflict.
4. Resource Constraints
Incompatible needs and competition over perceived or actual resource constraints can
create conflicts of interest.
Conflicts of interest occur when someone believes that to satisfy his or her own needs, the
needs and interests of someone else must be sacrificed.
Conflicts of interest can occur over:
Substantive issues including time, money, and physical resources
Procedural issues involving the way the conflict will be handled
Psychological issues including perceptions of fairness, trust, or interest in
participating
Conflicts of interest are best resolved by jointly addressing both parties’ interests.
Resolving conflicts of interest often increases creativity and innovation and stimulates
performance.
5. Change
Change also causes conflict. Indeed, it has been said that change is not possible without
conflict. One of the primary drivers of conflict is uncertainty.
External changes can also trigger conflict if regulations or changing market conditions
change the relative importance of different organizational groups.
6. Differing Values
People differ in their values and worldviews. These differences are the source of values
conflict, or conflict arising from perceived or actual incompatibilities in beliefs about what
is good or bad, right or wrong, and fair or unfair.
What violates someone’s values differs across national cultures. Different events can
trigger conflict in various cultural contexts due to different core concerns.
7. Poor Communication
Remember, uncertainty is one of the primary drivers of conflict. Poor communication
increases uncertainty, and can thus increase the potential for conflict.
Information conflict occurs when people lack important information, are misinformed,
interpret information differently, or disagree about which information is relevant.
Because email restricts the richness of communication and increases the chances for
misunderstanding, conflicts are more likely to escalate when people communicate via email
compared to face-to- face or over the telephone.
8. Task Interdependence
When one person or unit is dependent on another for resources or information, the potential
for conflict increases.
9. Organizational Structure
Structural conflict is the result of structural or process features of the organization.
Structural conflict can be horizontal or vertical.
Horizontal conflict occurs between groups at the same organizational level, such as
between line and staff employees or between departments such as production and
marketing.
Vertical conflict occurs across different hierarchical levels in the organization, including
conflicts over wage issues or control. Union–management relationships are a classic
example of vertical conflict.
Because structural conflict is due to organizational design, adjusting the design often
reduces or eliminates the structural conflict.
Matching a department’s structural design with its needs given its environment improves its
effectiveness.
B. Conflict Escalation
Conflict escalation happens when one party involved in a conflict (an individual, small group,
department, or entire organizations) first uses an aggressive tactic or begins using more
aggressive tactics than the other party.
When constructive approaches to conflict resolution are unsuccessful and break down, the
conflict escalates.
The farther the conflict escalates, the more difficult it is to reverse and the more likely it is to
become dysfunctional.
Friedrich Glasl’s nine-stage model of conflict escalation is summarized in Table 10.2.
In the first stage of conflict escalation, hardening, each side’s opinion hardens and the two
opponents adopt a collision course.
In the second stage, debate, each side’s opinion becomes polarized and emotions rise. Each
side begins thinking in terms of black and white and adopts a viewpoint of self-superiority and
opponent-inferiority. Constructive conflicts are generally resolved by the second stage.
The third stage, action over words, sees a decrease in empathy for the opponent, and the idea
that “talking no longer helps” emerges. The conflict becomes increasingly destructive in this
stage.
In the fourth stage, images/coalitions, negative rumors are spread and stereotypes are formed as
each side prepares for a fight and conducts a search for supporters.
The fifth stage, loss of face, marks the beginning of open and direct aggression intended to
cause the opponent’s loss of public face.
In the sixth stage, threat as a strategy, threats and counter-threats increase. As ultimatums are
made, conflict escalation accelerates.
In the seventh stage, limited attempts to overthrow, the opponent is no longer viewed as a
person.
In the eighth stage, fragmentation of the enemy, the goal becomes the destruction and
dissolution of the system. This goal is pursued aggressively.
The ninth and final stage, together into the abyss, sees the descent into total confrontation with
no way back. Extermination of the opponent at the price of self-extermination is seen and
accepted.
The later stages of this conflict escalation model might sound extreme, but unfortunately
workplace aggression and violence do happen.
Table 10.3 summarizes some of the factors associated with an increased risk of workplace
violence resulting from conflict.
Generating feelings of empathy and sympathy and keeping both parties focused on common
goals also helps to de-escalate conflict.
Fairness and the appearance of fairness often decrease the risk of workplace violence when
conflicts do occur.
C. De-Escalating Conflict
Even if it does not escalate quickly, unresolved conflict drains employees’ energy and reduces
their performance.
It is obviously easier to manage conflict escalation in the early stages of a conflict.
Unfortunately, conflicts are often hard to detect in their early stages.
If you are involved in a conflict, one of the best ways to prevent further escalation is to react
equivalently to the other party and not overreact. Sometimes under-reacting can trigger de-
escalation of the conflict.
As a manager, you can reduce conflict escalation by modeling de-escalation processes, and by
setting and enforcing limits on conflict escalation.
Managers can serve as a conflict resolution facilitator as well. It is also important to continue
to monitor conflicts to ensure that they do not reemerge.
Table 10.4 summarizes what to do and some things to avoid in de–escalating conflict.
After a conflict is resolved, it is important to reestablish a sense of justice and trust among the
parties.
It is also important to remember that you do not always have to intervene in a conflict,
particularly if it is not affecting job performance.
D. Role of Emotion in Conflict
When we are in conflict we often feel emotionally charged.
There is an important distinction between perceiving conflict and feeling conflict—conflict is
often not recognized until it is felt.
Even though the emotional component is most evident in relationship conflict, task and process
conflict also can contain high levels of emotion.
Many people let their feelings and emotions influence how they deal with conflict. Controlling
your emotions and staying focused on the issues can help to prevent a conflict from escalating.
Assessing and acknowledging the emotions of the other party can also help you to more
effectively manage the conflict.
II. INTERPERSONAL CONFLICT MANAGEMENT STRATEGIES
Once you understand the source of a conflict you are engaged in, you need to identify the best
strategy for addressing it. There are five conflict management strategies that differ in their concern
for others and concern for your own interests.
Figure 10.1 illustrates how these five styles of managing interpersonal conflict compare in their
focus on others and on pursuing one’s self-interests.
Collaborating reflects a high concern for your own interests and a high concern for the
interests of the other party. This conflict management style emphasizes problem solving and
pursues an outcome that gives both parties what they want. Collaboration helps to build
commitment to the outcome, although the communication required to reach a solution can
take substantial time and energy. The objective of collaboration is to fulfill both parties’
needs with a goal of “I win / you win.”
Compromising is a conflict management style in which each side sacrifices something in
order to end the conflict. This middle-ground style reflects a moderate concern for both your
and the other party’s interests. The goal of compromising is “I win some and lose some / you
win some and lose some.”
Competing is pursuing one’s own interest at the expense of the other party. This approach is
generally used when the conflict issue is important or to set a precedent. However, this style
can escalate the conflict and the loser may try to retaliate. A person who uses threats and
ultimatums is using a competing conflict management style. The goal of competing is “I
win / you lose.”
Accommodating is a cooperative conflict management style. This style is generally used
when the issue is more important to the other party than to you or if you recognize you were
wrong. The goal of accommodating is “I lose / you win.”
Avoiding is a passive conflict management style involving ignoring the conflict or denying
that it exists. This style reflects a low concern for both parties. When used to manage trivial
conflicts, no damage may be done, but it can result in maximum damage when important
issues are involved. The goal of avoiding is “no winners / no losers.”
In general, each style of handling interpersonal conflict is appropriate and ethical in some situations
as long as it is used to attain the organization’s proper goals.
Remember, because people differ in their preferred conflict management styles, it is important to
adapt your own style accordingly. What is most important is that you proactively manage
workplace conflict.
Global Issues: Conflict Management Differences Across Cultures
Summary: Individuals from different cultures adopt different conflict resolution strategies. Asian
managers avoid discussing a conflict. U.S. managers prefer a style of dominance, competing to see who
can convince the other. Chinese managers favor compromise and avoidance, whereas British executives
favor collaboration and competition. Arab Middle Eastern executives use an integrating and avoiding
style. An Indian employee is hesitant to give a superior direct feedback to save face. Instead, the person
may tell you what you want to hear. Because Indians communicate positives, you should listen for what
they do not say. A desire to maintain face is related to a dominating conflict style, and a desire to
maintain the face of the other party is related to avoiding, integrating, and compromising styles.
Collective cultures manage conflict differently from individualistic cultures. Collectivism emphasizes
group harmony whereas individualism emphasizes individual rights. The Chinese culture is collective
and the North American culture is individualistic. Collective societies avoid open conflict – conflict is
resolved in inner circles before it justifies public involvement.
III. THE CONFLICT PROCESS
Putting it all together, the conflict process is summarized in Figure 10.2.
After a potential conflict is triggered, it is perceived by both parties. The true disagreement may
differ from the perceived disagreement.
If neither party experiences emotion in reaction to the potential conflict, it does not escalate.
If the conflict escalates, both sides will then implement one or more conflict management strategies
that either will end the conflict constructively or allow the conflict to continue to escalate, perhaps
to the point of becoming destructive.
A. Conflict Management Skills
Fortunately, most managers can learn the necessary skills for effective conflict management.
Professionals in conflict resolution training suggest four areas of skill development:
1. Listening – including eye contact, rephrasing, and summarizing
2. Questioning
3. Communicating nonverbally
4. Mediating
If you are mediating a conflict, ask open rather than leading questions, and use nonverbal cues
to show that you are sincerely trying to help. Read nonverbal cues to learn additional
information.
Mediation skills include open-mindedness, staying nonjudgmental and calm, demonstrating
empathy and sensitivity, remaining neutral, respecting confidentiality, and showing flexibility
and resiliency.
A person’s ability to successfully resolve conflict is related to his or her effectiveness as a
leader.
Managers with poor conflict management skills hit a promotional ceiling much earlier in their
careers.
There are strong relationships between certain conflict resolution behaviors and perceived
suitability for promotion, which are summarized in Table 10.5.
B. Creating Constructive Conflict
What can managers do to increase the positive outcomes of conflict?
To successfully create constructive conflict, organizations often punish conflict avoiders.
Rewarding employees who engage in constructive conflict can help to reduce employees’ fears
of ridicule or rejection.
A simple “thank you” for voicing a dissenting opinion can signal to employees that it is okay to
speak up.
Assigning one or more employees to play the role of devil’s advocate can help to generate
constructive conflict by providing a safer environment for the introduction of different
perspectives.
IV. THE NEGOTIATION PROCESS
At some time or another everyone has to negotiate.
We often experience conflicts with other people in which we must negotiate to reach a solution.
Negotiation skills thus are not only critical for managers, but also improve the effectiveness of all
employees.
A. Negotiating Skills
Negotiation is a process in which two or more parties make offers, counteroffers, and
concessions in order to reach an agreement.
Most managers do a lot of negotiating as part of their jobs.
There are two types of negotiation, distributive and integrative.
Distributive negotiation occurs under zero-sum conditions, where any gain to one party is
offset by an equivalent loss to the other party.
Distributive negotiation essentially distributes resources among the parties involved. Because
distributive negotiation structures the conflict in a win-lose way, it tends to be competitive and
adversarial.
Integrative negotiation is a win-win negotiation in which the agreement involves no loss to
either party.
In general, integrative bargaining is better than distributive bargaining because when it is over
neither party feels that they have lost. Integrative bargaining helps to build good long-term
relationships, and minimizes grudges between the parties.
The four fundamental principles of integrative negotiation are:
1. Separate the people from the problem – separate relationship issues from substantive
issues, and deal with them independently
2. Focus on interests, not positions – negotiate about things that people really want and
need, and not what they say they want or need
3. Invent options for mutual gain – look for new solutions that allow both sides to win
4. Insist on objective fairness criteria – outside, objective fairness criteria for the
negotiated agreement are ideal if they exist
It is also helpful to research and understand the individual with whom you will be negotiating.
Be sure to prepare well, listen actively, and think through your alternatives. The more options
you feel you have, the better a negotiating position you will be in.
Here are some suggestions for being an effective negotiator:
Do not view this as an either/or proposition, negotiating is about compromise
Each side should know the other’s perception of the issue and their interests
Identify what you can and cannot part with
Try to identify and use sources of leverage
Show the other side that you understand their position
Suppress your emotions
Know your “BATNA” – Best Alternative to a Negotiated Agreement
If negotiations stall, letting the other side know that you are prepared to proceed with your
backup plan can also help to get the process started up again.
B. Cultural Issues in Negotiations
Different national cultures have different preferred negotiation styles. For example, Russians
tend to ignore deadlines and view concessions as a sign of weakness.
Because Americans’ desire to be liked is known in other cultures, skilled negotiators from other
cultures use this to their advantage by making friendship conditional on the final outcome of
the negotiation.
When people believe they have been treated disrespectfully as a result of differing cultural
norms, the whole project can blow up.
Clearly, intercultural negotiation requires paying attention to issues beyond what is being
negotiated. Preparation is particularly important when engaging in cross-cultural negotiations.
C. Alternative Dispute Resolution
Sometimes two parties are unable to reach an acceptable settlement through direct negotiations
with each other. In such cases, the parties may involve a third party to overcome the stalemate
and avoid a trial.
This process is sometimes called alternative dispute resolution. There are three types of
alternative dispute resolution:
1. Conciliation: A third party builds a positive relationship between the parties, improves
their communication, and facilitates their discussion. Conciliation facilitates a
discussion and directs the parties toward a satisfactory settlement and may issue a
binding opinion if both parties agreed to that ahead of time.
2. Mediation: An impartial third party (the mediator) facilitates a discussion using
persuasion and logic, suggesting alternatives, and establishing each side’s priorities.
The mediator suggests a settlement that does not have to be accepted.
3. Arbitration: A third party is involved and usually has the authority to impose a
settlement on the parties.
Conciliation is often the first step in the alternative dispute resolution process. Its goal is to get
the parties to better communicate and resolve the problem on their own, although the
conciliator may suggest a resolution that the parties can accept or reject.
Mediation is a voluntary and nonbinding process, whereas the results of arbitration are legally
binding. If the mediator is not perceived as neutral, he or she is not likely to be effective.
Arbitration may be required by a contract or by law, or may be voluntary if the parties agree to
it. Although arbitration, unlike mediation, always results in a settlement, it has greater potential
to leave at least one party dissatisfied, which could cause the conflict to resurface later.
An ombudsman is someone who investigates complaints and mediates fair settlements between
aggrieved parties. Ombudsmen help to resolve disputes while they are relatively small.
CASE STUDY: Ombudsman to the Rescue
Summary: A growing number of small and mid-size businesses are enlisting ombudsmen to handle
internal conflicts. At Sigmet, a Massachusetts data processor design company, even small coworker
disagreements could lead to a grudge match. To better deal with the internal conflicts, Sigmet hired an
ombudsman for a few hours a week to ask how things are going and counsel upset employees.
1. How has the ombudsman decreased conflicts at Sigmet?
Having a neutral person help resolve conflicts has made a real difference. The ombudsman asks how
2. Would you feel comfortable using an ombudsman to resolve a conflict with a coworker? Why
or why not?
Most students would say yes. An ombudsman could bring a fresh, unemotional perspective to a
3. What could companies do to maximize the effectiveness of an ombudsman?
Companies could communicate effectively to make sure that employees are aware of the services of
Summary and Application
Conflict is a natural part of organizational life. Organizational effectiveness is enhanced through an
appropriate diagnosis and management of conflict.
Some of the best conflict resolution behaviors are perspective taking, creating solutions, expressing
emotions, reaching out, and documenting areas of agreement and disagreement.
Some of the worst conflict management behaviors are avoiding the conflict, winning at all costs,
displaying anger, demeaning the other party, and retaliating.
Negotiation is one of the best ways to dissipate potential conflict.