Conflict and negotiation

Wherever people depend on each other, conflict is inevitable. Departments compete for budgets, colleagues disagree about priorities, unions and employers bargain over wages, and suppliers and buyers haggle over price. Conflict is often seen as something to eliminate, but well-managed conflict can surface better ideas, expose problems and lead to stronger agreements. Poorly managed conflict wastes time, damages relationships and drives people away. This lesson explains the types and sources of conflict, styles for handling it, the role of third parties, and the fundamentals of negotiation. BUS-120 covers the communication skills of meetings and job-offer negotiation; here the focus is on conflict as an organizational process and on negotiation strategy.

What conflict is

Conflict is a process that begins when one party perceives that another party has negatively affected, or is about to negatively affect, something the first party cares about. The definition emphasizes perception: if no one perceives a conflict, it does not exist, and people can perceive conflict where interests are actually compatible. Views of conflict have changed over time. The traditional view saw all conflict as harmful, a sign of poor communication and management. The human relations view saw conflict as a natural part of group life. The interactionist view went further, arguing that some conflict is necessary to prevent groups from becoming stagnant and complacent. Contemporary thinking emphasizes managing conflict: the aim is not to maximize or eliminate conflict but to channel it productively.

Types of conflict

Researchers distinguish three types. Task conflict concerns the content and goals of the work, such as which marketing strategy to choose. Relationship conflict concerns interpersonal relationships, such as personality clashes and personal animosity. Process conflict concerns how the work gets done, such as who should do what and when. A large meta-analysis by de Wit, Greer and Jehn (2012) found that relationship and process conflict are consistently harmful to team performance and satisfaction. Task conflict is more complex: it tends to be harmful when relationship conflict is also present, but can be neutral or beneficial in teams of senior people and when the conflict is about decisions rather than routine tasks, especially when there is high trust and psychological safety.

The difficulty is that task conflict can easily turn into relationship conflict when people feel their competence is attacked. Teams that keep debate focused on evidence, that criticize ideas rather than people and that have strong trust can disagree vigorously without lasting damage.

Sources of conflict

Conflict has structural and personal sources. Structural sources include incompatible goals (sales wants customized products, production wants long standardized runs), interdependence (one team cannot finish until another delivers), scarce resources, ambiguous rules and responsibilities, differentiation (departments with different training, time horizons and cultures), communication problems and reward systems that set groups against each other. Personal sources include differences in values and personality, and perceptions shaped by the biases discussed in lesson 3. When conflict recurs between the same groups, the cause is usually structural, and fixing the structure works better than urging people to get along.

The conflict process

Conflict can be understood as a five-stage process. In stage 1, potential opposition or incompatibility, conditions such as poor communication, structural factors or personal variables create opportunities for conflict. In stage 2, cognition and personalization, the conflict is perceived and felt; emotions shape how it is defined. In stage 3, intentions, parties decide how to respond. In stage 4, behavior, the conflict becomes visible through statements, actions and reactions, which can escalate from minor disagreements to threats and aggression. In stage 5, outcomes, the conflict may improve group performance through better decisions and innovation, or reduce it through poor communication, reduced cohesion and wasted effort.

Conflict-handling styles

Kenneth Thomas and Ralph Kilmann described five conflict-handling intentions along two dimensions: assertiveness, the degree to which a party tries to satisfy their own concerns, and cooperativeness, the degree to which they try to satisfy the other party's concerns. Competing is assertive and uncooperative, pursuing one's own interests regardless of the impact on the other party. Collaborating is assertive and cooperative, seeking a solution that fully satisfies both. Avoiding is unassertive and uncooperative, withdrawing from or suppressing the conflict. Accommodating is unassertive and cooperative, putting the other's interests first. Compromising sits in the middle, with each party giving up something.

No style is always best. Each fits certain situations, and skilled people move between them. A common error is to rely on a single habitual style, whether always avoiding, always competing or always splitting the difference.

Third-party conflict resolution

When parties cannot resolve a conflict themselves, third parties can help. A facilitator helps the parties communicate and structure their discussion. A mediator is a neutral third party who helps the parties reach a voluntary agreement through reasoning, persuasion and suggesting alternatives, without the power to impose a decision. An arbitrator has authority to dictate an agreement; arbitration can be voluntary or compulsory, and binding or non-binding. An ombudsperson is an impartial, confidential resource who helps employees navigate concerns and can identify systemic problems. Managers often act informally as mediators between team members.

In unionized workplaces in the United States, most collective agreements contain a grievance procedure ending in binding arbitration and a no-strike clause, and courts generally defer to arbitrators' decisions. Under the National Labor Relations Act, private-sector employers and unions must bargain in good faith over wages, hours and other terms and conditions of employment, and the Federal Mediation and Conciliation Service can help with disputes. Most non-union employees work at will, though many employers require employment disputes to be resolved through private arbitration agreements, which courts generally enforce.

Negotiation: distributive and integrative bargaining

Negotiation is a process in which two or more parties exchange goods or services and try to agree on the exchange rate for them. There are two broad approaches. Distributive bargaining seeks to divide a fixed amount of resources, a fixed pie: one party's gain is the other's loss. Buying a used car, where every dollar the seller gains the buyer loses, is the classic example. Integrative bargaining seeks one or more settlements that create a win–win solution, expanding the pie by finding trades across issues that the parties value differently.

Several concepts are central to both. Each party has a target point, what it would like to achieve, and a resistance or reservation point, the least acceptable outcome, beyond which it would rather walk away. The bargaining zone, or zone of possible agreement (ZOPA), is the range between the two parties' reservation points. If the reservation points do not overlap, there is no ZOPA and no deal is possible without changing the terms. The best alternative to a negotiated agreement (BATNA) is what a party will do if negotiations fail; it determines the reservation point, and improving one's BATNA is the most reliable way to gain negotiating power.

Integrative bargaining depends on looking beneath positions to interests. A position is what a party says it wants ("We need a 6 % raise"); an interest is why it wants it ("Our members are falling behind inflation and worry about job security"). Roger Fisher and William Ury's principled negotiation, described in Getting to Yes, recommends separating the people from the problem, focusing on interests rather than positions, inventing options for mutual gain and insisting on objective criteria. Logrolling, trading concessions on issues one party values less for gains on issues it values more, is a core integrative technique.

The negotiation process and ethics

Negotiation typically moves through five steps: preparation and planning (clarifying goals, interests, BATNA and the other party's likely position), definition of ground rules, clarification and justification of positions, bargaining and problem-solving, and closure and implementation. Preparation is the step most often neglected and the one that most improves outcomes. Good negotiators also manage emotions, their own and others', since anger can win concessions in one-off deals but damages long-term relationships and invites retaliation.

Individual differences and culture affect negotiation. Research finds that women, on average, negotiate less often for themselves than men and can face backlash for assertive self-advocacy, though the differences shrink when people negotiate on behalf of others and when norms make negotiation expected. Pay-transparency laws (lesson 6) narrow information gaps that previously disadvantaged people who did not know market rates. Cultural norms affect how directly people state positions, how much time is spent building relationships and whether silence is comfortable. Ethical negotiators avoid lying about material facts, making threats they would not carry out and exploiting the other party's mistakes in ways that would destroy trust. Deception may win a single deal but damages reputation in markets and organizations where people deal with each other repeatedly.