The International Journal of Conflict Management 2002, Vol. 13, No. 3, pp. 206-235 TOWARD A THEORY OF MANAGING ORGANIZATIONAL CONFLICT M. Afzalur Rahim Center for Advanced Studies in Management The management of organizational conflict involves the diagnosis of and intervention in affective and substantive conflicts at the interpersonal, intragroup, and intergroup levels and the styles (strategies) used to handle these conflicts. A diagnosis should indicate whether there is need for an intervention and the type of intervention needed. In general, an intervention is designed (a) to attain and maintain a moderate amount of substantive conflict in nonroutine tasks at various levels, (b) to reduce affective conflict at all levels, and (c) to enable the organizational members to select and use the appropriate styles of handling conflict so that various situations can be effectively dealt with. Organizational learning and effectiveness can be enhanced through an appropriate diagnosis of and process and structural interventions in conflict. Even though conflict is often said to be functional for organizations, most recommendations relating to organizational conflict still fall within the spectrum of conflict reduction, resolution, or minimization. Action recommendations from the current organizational conflict literature show a disturbing lag when compared to functional set of background assumptions that are often endorsed. These recom- mendations are usually designed to deal with conflict at the dyadic or group levels and are not appropriate for macro-level changes in an organization. Insofar as it could be determined, the literature on organizational conflict is deficient (with minor exceptions) in three major areas: 1. There is no clear set of rules to suggest when conflict ought to be main- tained at a certain level, when reduced, when ignored, and when enhanced. 2. There is no clear set of guidelines to suggest how conflict can be reduced, ignored, or enhanced to increase organizational learning and effectiveness. Note: The author wishes to thank Michael E. Roloff and three anonymous reviewers for critical comments and suggestions. M. A. RAHIM 207 3. There is no clear set of rules to indicate how conflict involving different situations can be managed effectively. This paper addresses these issues at a macro level and provides a design for managing interpersonal, intragroup, and intergroup conflicts. All these can be use- ful to the management practitioner as well as the academician. Nature of Conflict According to Roloff (1987), "organizational conflict occurs when members engage in activities that are incompatible with those of colleagues within their net- work, members of other collectivities, or unaffiliated individuals who utilize the services or products of the organization" (p. 496). We broaden this definition by conceptualizing conflict as an interactive process manifested in incompatibility, disagreement, or dissonance within or between social entities (i.e., individual, group, organization, etc.). Calling conflict an interactive process does not preclude the possibilities of intraindividual conflict, for it is known that a person often inter- acts with self. Obviously, one also interacts with others. Conflict may occur when: 1. A party is required to engage in an activity that is incongruent with his or her needs or interests. 2. A party holds behavioral preferences, the satisfaction of which is incompatible with another person's implementation of his or her preferences. 3. A party wants some mutually desirable resource that is in short supply, such that the wants of everyone may not be satisfied fully. 4. A party possesses attitudes, values, skills, and goals that are salient in directing his or her behavior but are perceived to be exclusive of the attitudes, val- ues, skills, and goals held by the other(s). 5. Two parties have partially exclusive behavioral preferences regarding their joint actions. 6. Two parties are interdependent in the performance of functions or activi- ties. This definition is much more inclusive, which implies that conflict can relate to incompatible preferences, goals, and not just activities. It should be recognized that in order for conflict to occur, it has to exceed the threshold level of intensity before the parties experience (or become aware of) any conflict. This principle of conflict threshold is consistent with Baron's (1990) contention that opposed inter- ests must be recognized by parties for conflict to exist. Managing Conflict The emphasis of this paper is away from the resolution of conflict to the man- agement of conflict. The difference between resolution and management of conflict is more than semantic (Robbins, 1978). Conflict resolution implies reduction, elimination, or termination of conflict. A large number of studies on negotiation, bargaining, mediation, and arbitration fall into the conflict resolution category. In a review of literature on conflict and conflict management, Wall and Callister (1995) made the following comments: The International Journal of Conflict Management, Vol. 13, No. 3, 2002 208 CONFLICT MANAGEMENT THEORY we raised three of the most important questions in this article: is moderate conflict desirable? Is too little conflict as dysfunctional as too much? And should leaders, at times, promote conflict to attain organizational goals? Our tentative answers to these questions are no, no, and no. (p. 545) Wall and Callister's approach to handling conflict is inconsistent with the rec- ognition of scholars who suggest that organizational conflict has both functional and dysfunctional outcomes (Jehn, 1995; Mitroff, 1998; Pelled, Eisenhardt, & Xin, 1999). Eisenhardt, Kahwajy, and Bourgeois (1998) suggested that conflict in top management is inevitable and it is usually valuable. "Conflict at senior levels sur- rounding appropriate paths of action—what may be termed 'substantive,' 'cogni- tive,' or 'issue-oriented' conflict is essential for effective strategic choice" (p. 142). Therefore, it is our conclusion that Wall and Callister's fall within the realm of con- flict resolution, which involves reduction, or termination of conflict. This amounts to throwing out the baby with the bathwater. What we need for contemporary organizations is conflict management and not conflict resolution. Conflict management does not necessarily imply avoidance, reduction, or termination of conflict. It involves designing effective macro-level strategies to minimize the dysfunctions of conflict and enhancing the constructive functions of conflict in order to enhance learning and effectiveness in an organiza- tion. Organizational learning is a significant construct and a number of contempo- rary organization theorists have indicated that the issue for the organizations is not whether they want to learn; they must learn as fast as they can (Argysis & Schon, 1996; Schein, 1993; Senge, 1990). Luthans, Rubach, and Marsnik (1995) con- cluded from their review of organizational learning literature that "the presence of tension and conflict seem to be essential characteristics of the learning organiza- tion. The tension and conflict will be evidenced by questioning, inquiry, disequilib- rium, and a challenging of the status quo" (p. 30). Unfortunately, the literature on organizational conflict does not provide a clear link between conflict management strategies and organizational learning and effectiveness. Argyris (1994) suggests that existing theories encourage self-reinforcing and anti-learning processes which can best be described as "quasi-resolution of conflict" (p. 3). Several scholars have indicated the need for accommodating tensions and managing conflict construc- tively or the potential for collective learning will not be realized (Pascale, 1990; Senge, Kleiner, Roberts, Ross, & Smith, 1994). The implicit assumption here is that conflict management need to be strengthened at a macro-level for encouraging learning and effectiveness. Several conflict management scholars (Amason, 1996; Jehn, Northcraft, & Neale, 1999; Rahim, 2001) have suggested that conflict management strategies involve recognition of the following: 1. Certain types of conflicts, which may have negative effects on individual and group performance, may have to be reduced. These conflicts are generally caused by the negative reactions of organizational members (e.g., personal attacks of group members, racial disharmony, sexual harassment). The International Journal of Conflict Management, Vol. 13, No. 3, 2002 M. A. RAHIM 209 2. There are other types of conflicts that may have positive effects on the individual and group performance. These conflicts relate to disagreements relating to tasks, policies, and other organizational issues. Conflict management strategies involve generation and maintenance of a moderate amount of these conflicts. 3. Organizational members while interacting with each other will be required to deal with their disagreements constructively. This calls for learning how to use different conflict-handling styles to deal with various situations effectively. Criteria for Conflict Management In order for conflict management strategies to be effective, they should satisfy certain criteria. These have been derived from the diverse literature on organization theory and organizational behavior. The following criteria are particularly useful for conflict management, but in general, they may be useful for decision making in management: 1. Organizational Learning and Effectiveness. Conflict management strate- gies should be designed to enhance organizational learning (Luthans et al., 1995; Tompkins, 1995). It is expected that organizational learning will lead to long-term effectiveness. In order to attain this objective, conflict management strategies should be designed to enhance critical and innovative thinking to learn the process of diagnosis and intervention in the right problems. 2. Needs of Stakeholders. Conflict management strategies should be designed to satisfy the needs and expectations of the strategic constituencies (stakeholders) and to attain a balance among them. Mitroff (1998) strongly suggests picking the right stakeholders to solve the right problems. Sometimes multiple parties are involved in a conflict in an organization and the challenge of conflict management would be to involve these parties in a problem solving process that will lead to collective learning and organizational effectiveness. It is expected that this process will lead to satisfaction of the relevant stakeholders. 3. Ethics. Mitroff (1998) is a strong advocate of ethical management. He concluded that "if we can't define a problem so that it leads to ethical actions that benefit humankind, then either we haven't defined or are currently unable to define the problem properly. A wise leader must behave ethically, and to do so the leader should be open to new information and be willing to change his or her mind. By the same token subordinates and other stakeholders have an ethical duty to speak out against the decisions of supervisors when consequences of these decisions are likely to be serious. To manage conflicts ethically, organizations should institutionalize the positions of employee advocate, customer and supplier advocate, as well as envi- ronmental and stockholder advocates. Only if these advocates are heard by deci- sion-makers in organizations may we hope for an improved record of ethically managed organizational conflict (Rahim, Garrett, & Buntzman, 1992). The disas- trous outcomes in Enron and Worldcom probably could be avoided if this process was legitimized in these organizations. The International Journal of Conflict Management, Vol. 13, No. 3, 2002 210 CONFLICT MANAGEMENT THEORY Conflict Management Strategy Existing literature on conflict management is deficient on strategies needed to manage conflict at the macro-level, which can satisfy the above criteria. An effec- tive conflict management strategy should: 1. Minimize Affective Conflicts at Various Levels. Affective conflict refers to inconsistency in interpersonal relationships, which occurs when organizational members become aware that their feelings and emotions regarding some of the issues are incompatible. "Summarily stated, relationship conflicts interfere with task-related effort because members focus on reducing threats, increasing power, and attempting to build cohesion rather than working on task The conflict causes members to be negative, irritable, suspicious, and resentful" (Jehn, 1997, pp. 531-532). A. Evidence indicates that affective conflict impedes group performance. It affects group performance by limiting information processing ability and cognitive functioning of group members and antagonistic attributions of group members' behavior (Amason, 1996; Baron, 1997; Jehn, 1995; Jehn et al., 1999; Wall & Nolan, 1986). B. Affective conflict diminishes group loyalty, workgroup commitment, intent to stay in the present organization, and job satisfaction (Amason, 1996; Jehn, 1995, 1997; Jehn et al., 1999). These result from higher levels of stress and anxi- ety, and conflict escalation. 2. Attain and Maintain a Moderate Amount of Substantive Conflict. Substantive conflict occurs when two or more organizational members disagree on their task or content issues. Substantive conflict is very similar to issue conflict, which occurs when two or more social entities disagree on the recognition and solution to a task problem. A study by Jehn (1995) suggests that a moderate level of substantive conflict is beneficial as it stimulates discussion and debate, which help groups to attain higher level of performance. "Groups with an absence of task conflict may miss new ways to enhance their performance, while very high levels of task conflict may interfere with task completion" (Jehn, 1997, p. 532). Evidence indicates that substantive conflict is positively associated with beneficial outcomes: A. Groups that report substantive conflict are able to make better decisions than those that do not (Amason, 1996; Cosier & Rose, 1977; Fiol, 1994; Putnam, 1994; Schweiger, Sandberg, & Ragan, 1986). Substantive conflict encourages greater understanding of the issues, which leads to better decisions. B. Groups that report substantive conflict generally have higher performance. This conflict can improve group performance through better understanding of vari- ous viewpoints and alternative solutions (Bourgeois, 1985; Eisenhardt & Schoon- hoven, 1990; Jehn, 1995, 1997; Jehn et al., 1999). It should be noted that the bene- ficial effects of substantive conflict on performance were found only in groups performing nonroutine tasks, but not groups performing standardized or routine tasks. Although substantive conflict enhances group performance, like affective conflict, it can diminish group loyalty, workgroup commitment, intent to stay in the present organization, and job satisfaction (Jehn, 1997; Jehn et al., 1999). As a The International Journal of Conflict Management, Vol. 13, No. 3, 2002/nBased on the case above, please provide responses to the following items (in three separate answers): 1. Identify and describe the major and minor problems of the company as depicted in the case distinguish the type(s) of conflict and if it is interpersonal and/or organizational/team conflict. Define all terms. 2. Provide a detailed analysis of the problems you described in the first question using models and methods from Hocker, Rahim and/or other sources from class. Clearly identify what approach(es) you are using in the analysis. You can use more than one as long as it is clearly stated. 3. Provide realistic, detailed and practical recommendation(s) for alternative courses of action using solutions and ideas from class content and discussions. These should flow logically from your analysis.

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