Workplace Conflict Types and Management Strategies

Types of Organizational Conflict

Constructive conflict can be found in any major company's development strategy. Managers at companies like Toyota and Coca-Cola create constructive conflicts using several methods. For example, they encourage employees to hold differing opinions and to compete with one another, rewarding them for doing so. This strategy of creative conflict is most commonly applied to the promotional strategy for a company's products and services.

Another type of conflict likely to emerge in any organization is interpersonal conflict. It appears and intensifies between two or more individuals within the same group or across different groups, whether formal or informal. It is generated by rules, personality differences, or differences regarding values, interests, or attitudes. For example, Pirelli Cables Australia Limited had to deal with a severe conflict of this kind over a decade ago. However, by implementing TQM programs, the company managed to overcome this negative situation (Dawson, 1995). In this case, the TQM programs focused on revising existing organizational attitudes and belief systems.

Inter-Group Conflict and Global Union Agreements

Robert E. Callahan identifies another important type of conflict: conflict between groups. It appears frequently between groups with different interests and objectives, and is usually very complex given both the causes that generate it and the effects it may produce. Most of the time, these conflicts lead to increased group cohesion and loyalty among members (Callahan, 1986). This type of conflict typically characterizes the relationship between unions and employers on one hand, or between unions and the state on the other. Such conflicts are extremely common in any economy, regardless of its level of development. For example, the Department of Industrial and Employment Relations in Malta handled 372 cases between 2000 and 2004, resolving 294 of them — approximately 80% of all trade disputes.

Several global multinational companies have signed agreements with the Union Network International (UNI) on behalf of their unions, which represent employees across the world. Among the most representative companies to have joined UNI are: Carrefour, Euradius, Falck, France Telecom, H&M, ISS, Metro, NAG, Nampak, OTE, Portugal Telecom, Securitas, Telefonica, and UPU. The agreements cover the telecommunications sector, the commerce sector, and the property services sector.

The Partnership Approach: Smorgon Steel Case Study

In order to improve the relationship between employers and employees and to diminish negative conflict, many companies have adopted a partnership approach. One such company is Smorgon Steel in Australia (Roberts, 2006). Partnership practices at Smorgon Steel significantly improved the company's performance. The partnership concept refers to formal agreements between employees and management that provide for the joint regulation of workplace procedures, employment provisions, and dispute resolution. Partnership relies entirely on trust between employees and their employers, and on shared interests and goals, so that mutual gain can be maximized and conflicts resolved more easily. Partnership has been shown to increase productivity, employee benefits, and trade union organizing ability, and is based on reciprocal commitment and obligations between employees and employers.

Smorgon Steel Group was established in 1983 and is Australia's second-largest manufacturer and largest supplier of steel products. The company has three operating divisions in Australia and New Zealand, all holding significant market share in key product segments. Given the highly competitive environment in which it operates, Smorgon Steel reduced its workforce from 9,914 employees in 2000–2001 to 5,975 in 2001–2002.

Between 1983 and the late 1990s, the company faced a persistently difficult industrial situation. This situation was generated by four factors: multi-unionism, a culture of distrust, informal relations, and a lack of leadership. First, the conflict was driven by multi-unionism: the company's employees were represented by three trade unions whose conflicting goals and ideologies created persistent friction with management. The unions pursued different objectives through different means, which generated communication problems and ultimately led to distrust and dishonest behavior between the parties. Second, the resulting culture of distrust made it very difficult to implement human resources initiatives. Third, the informal workplace relations policy applied by both management and the trade unions created severe difficulties in implementing strategic and operational objectives. Finally, the lack of leadership significantly influenced how the conflict developed, as neither management nor the trade unions took initiative to resolve the industrial conflict through mutual understanding.

The effects were significant: the company's performance was mediocre; employee turnover and absenteeism were very high; industrial conflict and disruptive production were persistent; output levels were extremely low; and employees had no involvement in formulating workplace initiatives.

These outcomes made a partnership approach necessary. As a result, the company's three trade unions and its management began to cooperate more closely. New trade union representatives were elected — representatives more open to consultation with management. Recognizing that multi-unionism was not a productive practice, the three unions merged into a single body: the Australian Workers Union. This new union's engagement led to a comprehensive benchmarking program based on training and salary structure. The company partnered with a German firm to deliver employee training, which significantly improved performance as well as employees' understanding of the business. An annualized, competency-based salary classification structure was also implemented following consultations between management and the trade union.

Conclusion

Conflicts are inevitable within any organization's employment relationship. Given that employers and employees will rarely reach full agreement on issues of pay, working conditions, interests, objectives, and opinions about the labor process, conflict will emerge in virtually every company sooner or later. Conflicts can only be diminished and kept under control through conflict management strategies applied by company managers. The most important causes that make conflict inevitable relate to pay, communication, and leadership. In very few cases can conflicts be avoided — only when anticipated early enough for managers to take adequate measures that neutralize the potential causes before they escalate.