Chapter 1: Anatomy of Conflict

Overview

"By some estimates, managers spend 20% of their time in conflict or managing it. A manager who earns $60,000 will be wasting, in profitability terms, $12,000 of that salary on conflict. If your company has 10 managers, that's a $120,000 hit to your bottom line." ^[1]

When Jeffrey Erle took over as president of Litton Enterprise Solutions, a California-based information and technology services provider and a division of Litton Industries, he knew he was in for a stiff challenge. ^[2] Erle's division was a loosely formed confederation of East Coast and West Coast operations that needed to be integrated in order to provide customers with a full spectrum of services.

The problem: Both operations had about as much in common as Al Qaeda and The Salvation Army. On the West Coast, managers had been around for more than thirty years , running one line of business: call centers. They were hardworking but resistant to change, and they were led by an executive who thought that he deserved Erle's position.

The East Coast operation had been cobbled together through recent acquisitions and specialized in enterprise-wide process consulting. The team was led by a general manager who believed that she should have been given the presidency. Her team was freewheeling and risk taking, and could not care less about Litton culture and tradition.

The lack of common ground had consequences. There was no communication between the two operations and no unified sense of direction. Covert sabotage was routinely waged by both camps to dilute the other side's effectiveness. And there was enough clawing and scrambling at the top of both operations to qualify for United Nations intervention. When Erle came on the scene, decision making had ground to a halt ”along with sales.

A company that does not manage internal conflict will not succeed, regardless of its efforts to reengineer structures and processes, rev up sales and marketing efforts, develop and acquire new products, and dot-com the business. When conflict is ignored ” especially at the top ”the result will be an enterprise that competes more passionately with itself than with its competitors .

Not all top teams and their organizations represent conflict-ridden, Balkanized environments. But even vaunted high-performance teams are not conflict-free utopias. Unmanaged conflict at the top of an organization is especially insidious, because it can compromise the competitive well-being of an organization.

A large pharmaceutical company located in the Northeast sought to eat away at its rival's market share by launching a new product in the feminine health category. The time frame was tight because of anticipated competitive moves; however, external competition paled compared to the internal cross-pressures.

The vice presidents of marketing and research both agreed that a new product was necessary for future growth, but the question was, "Which new product to launch?" Each executive argued strenuously for a different pet alternative, and they became increasingly intransigent. The president listened to the raging debate at several board meetings, until ”in an effort to end the stalemate ”he decided to play Solomon. He split the product launch in half, with 50 percent of the advertising dollars and other resources going to each product. His move quelled the conflict, but with insufficient resources, neither product could be brought to market ahead of the competition. Market share was lost, and the organization's franchise in feminine health care took years to rebuild.

Unresolved conflict, especially at the highest level of an organization, can result in unfortunate, and potentially deadly , consequences, such as:

• Unproductive activity

• Misdirected anger and hostility

• Increased costs and waste

• Poor quality

• Reduced productivity

• Increased absenteeism and turnover

In our two decades of consulting, we have seen many companies that were either paralyzed by unmanaged conflict or nearly destroyed by it. Yet, for these organizations, the first thing we stress is that putting an end to conflict is the last thing executives should hope to achieve. Conflict should be managed, not eliminated .

^[1] "Expert Advice on Setting Up a Conflict Resolution Training Program," Managing Training and Development , September 2000, p. 1.

^[2] Litton Industries decided to exit the professional services business, and at the end of 1999 sold most of Litton Enterprise Solutions to Acxiom. Litton Industries was acquired by Northrop Grumman in 2001.