Managing Conflict Networks for Organizational Health

Stephen Castle

May 12, 2020

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All organizations are conflict networks. Conflict exists between employees and management, between employees and their co-workers, and externally between your business and customers, vendors, investors, and regulators. These relationships can be represented as a weighted graph representing the complex dance of conflict existing between all of these groups.

Reducing overall long term net-conflict in an organization is the key to a healthy organization and modeling the impact of decisions in this way can result in better outcomes and act as a North Star. Any choice that results in long term decreased organizational conflict is always the right decision. Reducing long term conflict does NOT mean always avoiding short term conflict, in fact, it often does not.

It is also true that the value you place on any individual conflict in the system is subjective and a matter of opinion. In addition the approaches you may take to achieve these goals is infinite and simply having a framework will not give you exact answers to every question as your solution may range from doing a better job with your employee one on one meetings, to introducing new automation into a business process. However I find that thinking about my decisions this way leads to overall better outcomes and accurately describes the best way to create highly performing teams and companies.

Conflict network diagram.

Reducing overall long term net-conflict in an organization is the key to a healthy organization

If you have high customer conflict, every other internal conflict will be magnified.

Conflict Is a Divergence of Individual Needs

A divergence of needs drives conflict between parties involved with the organization. Needs can be financial, psychological, social, and emotional, and different parties commonly have different types of needs.

Employees have a set of needs based on their career goals, their compensation expectations, their feeling of fairness, and trust in leadership. They also have needs based on their relationships with co-workers.

Managers have needs dictated by their specific roles. They have conflicts with other departments, their reports, and executive actions. Management conflict is often driven by the metrics and expectations set upon them from above as enforcing and achieving these is their primary mission.

Executives have needs defined by the financial success of the business as well as personal needs. Their needs are often meta needs of the entire company and represent the sum results of actions across the organization as a whole. To this end, they are the most responsible for reducing net conflict.

Investors and Lenders have needs determined by their expectations for the future growth and evolution of the business and with your commitments and promises made to them.

Customers have needs based on their expectations for your products, your customer service practices, and your corporate behavior. Satisfying customer needs is the most important need for your organization to satisfy. Failing to do so makes all of the other relationships pointless, and even minimal tension with customers will make everything else you need to do harder. More on this later.

An Infinitely Complex Network

It is, in practice, impossible to completely meet the needs of all parties without trade-offs. Managing these trade-offs skillfully, and growing the pie of total resources available to meet and resolve a greater volume of needs is the path to reducing conflict and developing a healthy organization.

The relationships between these trade-offs are complex, and altering one relationship can have widespread unintended consequences. There are feedback loops and interdependencies. Failing to meet the financial needs of the organization, may result in the inability to meet the needs of employees. Failing to meet customer needs can lead to failure to meet financial needs. Failing to meet employee needs can cause underperformance and lead to the inability to meet customer needs, and so on and on.

This complexity is both a cause of concern because you can easily make mistakes, but also a cause for excitement because creative problem solving can result in incredible competitive advantages over other organizations that haven't solved the same problems that you have.

It also means that businesses are a social entity where both physical objective reality and subjective social perception play a role in the success and management of relationships. As a manager you must be aware of both and be capable of skillfully applying the right tool at the right time.

An Example Situation I need to decide if I should lay off 10% of the sales team. If I do so the remaining sales team will feel threatened and unhappy, it will increase conflict between them and management, it may decrease sales performance which would then increase conflict with investors, and could even impact customers if the sales team begins to subconciously reveal their displeasure. However performing the layoff will reduce conflict with the investors who would like to see the organization cut costs. In addition It will free up capital we can use to invest in new products that will result in a better market fit reducing frustration that customers have with us. A possible solution: I provide generous severance packages to the laid off employees reducing tensions and fear among remaining employees, I use clear and honest messaging with the remaining employees to retain their faith in the business and its leadership. This way I balance the needs of as many parties as possible, and prevent the top performing employees from coming into conflict with the company and leaving.

Customer Conflict is the Root of All Evil

Conflict with customers is the root source of conflict that can quickly spread to all other areas. Customers can have a conflict with your organization as a whole, with your products, or with individual employees. If you have high customer conflict, every other internal conflict will be magnified. This frequently causes a feedback loop of internal conflict resulting in an even worse ability to meet customer needs and increasing their dissatisfaction further.

If you have minimal conflict with customers, you have the luxury and flexibility to manage and repair internal disputes. However, if you currently have low customer conflict, and you fail to use the opportunity to reduce internal conflicts eventually internal conflicts will likely result in customer unhappiness and begin to erode customer satisfaction as well.

Management Skill Levels

A great manager reduces net conflict in the entire system; they optimize the trade-offs and find efficient, creative methods to meet more people's needs. A good manager surgically creates temporary conflict to relieve systemic terminal conflict and prevent future explosive strife caused by the slow increase of systemic conflict. A great manager.

A great manager reduces friction and problems at multiple degrees of separation from themselves. By decreasing conflict on a large scale they empower a healthier organization on a massive scale. They are unafraid to introduce surgical and immediate conflict when it will prevent, or remove oppressive long term conflicts or prevent future disasters.

A lousy manager let's low conflict simmer out of fear of creating conflict through action. Organizations with poor managers have a ton of hidden systemic conflict because no one is willing to take the initiative to resolve simmering troubles and inefficiencies. This is the kind of conflict where you have employees grumbling about silly inefficient processes, or not feeling fully motivated.

A terrible manager introduces conflict recklessly and without purpose. They not only lead organizations with a lot of process-driven conflicts no one can resolve, but they also engender distrust and anger by making decisions that explicitly increase conflict with no apparent future reduction in conflict as a result. A terrible manager.

A terrible manager is a danger to the organization. They drain productivity, happiness, and life from the business. They create conflict everywhere they go and with everything they do. They seldom reduce conflict, and when they do they ignore the future impact of their actions.

A Useful Framework for Employees Up and Down the Org Chart

All employees can take actions that either increase or decrease net conflict through their behavior, performance, and interactions with others.

Satisfying your own needs, your manager's needs, and the customer's needs are an accessible way for anyone to decrease conflict at their job. On the flip side if you become seen as a cause of conflict, it will lead to a negative perception of performance and likely lead to failure in your role.

Ask yourself, if you take any particular action, what will be the current and future impact on organizational conflict. How will this action impact my manager and his or her needs, how will it affect the customers, and how will it impact my relationships with co-workers. Consider carefully both the immediate conflict that will arise from your action as well as the slow steady-state impacts.

Skill at Minimizing Complex Conflicts is Synonymous with Management Skill

It should be clear by now that taking into account the needs of every party involved in an organization is mind-bogglingly complex and requires knowledge of every facet of the business. Because of this, anyone who shows a knack for it should be placed in positions with high impact to empower them to amplify their effect, resulting in an even more significant reduction of organizational conflict.

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