Sources of Conflict in A Business Organization

This article discusses the possible sources of conflict situations that may arise between each stakeholder group in a business.

Different people and groups of people involved in business operations, such as an employer and employees, tend to have the same long-term interest. It is the success of the business in the long term – growing sales, increasing profit and enlarging market share.

But each stakeholder group has different short-term interests that may lead to conflict and jeopardize that success. While workers aim to receive high payment for working as short working hours as possible, business owners aims to achieve satisfactory level of profit or maximize profit by keeping costs as low as possible.

That is why a business manager needs to balance the interests of all the firm’s stakeholders, of which employees are only one.

What do employees want?

Employees are likely to have a mix of the following objectives that they hope to achieve:

Increased salary and payment rates.
Improved employment packages, e.g. fringe benefits, paid holidays, additional monetary rewards, etc.
Better working terms and conditions, e.g. hours of work, rest breaks, etc.
Better-quality staff facilities, such as an improved canteen or office.  
Flexible working practices, e.g. flexible working hours.
Increased job security.
Protection against pay cuts.
Better training and development opportunities.
Recognition of trade union rights.
Personal protection form harassment at work.
Improved communication and greater participation in the decision-making process.
Protected grievance procedures.

What does employer want?

Employers are likely to have a mix of the following objectives that they hope to achieve:

Lower production costs to remain competitive.
Remuneration linked to performance.
Improved levels of productivity.
Reductions in the cost base as the result of staff reductions.
Lower rates of absenteeism and staff turnover (higher staff retention).
Job flexibility, such as the willingness of employees to cover for absent colleagues.
Reduction in trade union power and influence.

Case Study 1: From Europe to North America, India’s offshore workers – call center operators, data-entry clerks and telemarketers – may seem like the sweatshop laborers of the information age, toiling for long hours for modest pay. But an international alliance of unions that wants them to become union members is finding it very hard to recruit them. These workers think of themselves as members of a relatively well-paid, respected professional elite in no need of union protection. 

The back-office outsourcing industry in India employs around 400,000 workers, yet Union Network International (UNI) organization has only recruited 50 of them so far. ‘A union would make sense if we had no job security,’ said Sunayma Ramen, a technical support worker for IMB, ‘but there are so many jobs and so few qualified staff that firms are trying all possible means to keep employees happy so that they will not leave.’ 

A similar situation has arisen in the USA where unions have lost many members as traditional manufacturing industries decline. They find it very difficult to recruit white-collar workers and professional workers in the finance and other service industries. An Indian who did join UNI is Sonali Singh, a call center supervisor. She said companies give incentives to those who work beyond contracted time and young workers often ignore health problems, such as insomnia, bad backs, and problems associated with too few bathroom-breaks only to earn extra money. 

‘The industry’s motto is to shut your mouth and take your money’, she said, ‘and we want to change that’.

Sources of conflict in a business organization

Workplace conflict usually happens because different groups of people want different things from one another. For example, an employer and employee conflict may result from a number of factors such as payments, working conditions, introduction of new machinery, availability of flexible working schemes, etc.

Let’s take a look in details at the most typical sources of conflict in the workplace:

Needs and wants. This applies to the conflicting objectives of stakeholders, particularly employees and management. Conflicts often arise due when employees’ needs and desires being ignored as management wants to keep pay for workers as low as possible. Workers are looking for attractive pay levels, competitive remuneration packages, attractive terms of employment, comfortable working conditions as well as job stability and security.
Values, belief, attitudes. Workplace conflict can arise when people hold incompatible principles comparing to those in general society, and are unwilling to compromise. There is a huge variety of attitudes and beliefs, varying work ethics and of course different religious affiliations in a business organization. This can make the management of conflict a very challenging task. While under normal circumstances these differences may be largely invisible or minor, but during conflict between individuals they may be brought to the surface.
Perceptions. Different people see and interpret things differently, hence they have different perceptions which may easily lead to conflict. Some people enjoy something while other get annoyed by the same thing, or some people like change while others do not. Therefore, it is important for management to effectively communicate in order to unite perceptions, if conflict is to be avoided or minimized.
Power abuse. When people in a position of power force others to do something against their will, gain unfair benefits or use exploitative techniques, this battle for supremacy will cause friction in the workplace. Supervisors often put additional pressure on employees to meet unrealistic production quotas or sales targets. In small businesses, owners often dislike having anybody challenging their decision making. Bullying others or abusing power to victimize others in a workplace is a sure way to conflict.
Feelings and emotions. Emotional differences between employees in the work environment can be so huge that conflict can easily arise. Because professional career cannot be completely detached from private life, many personal problems such as family issues can affect workers in the workplace influencing their emotions, reactions and behaviors.
Change. Both external changes and internal changes can be a source of conflict between employees and management. This can include having a new manager, deployment of new technology or changes in the marketplace. People tend to resist to change. So, any major change in a business organization needs to be managed appropriately.
Redundancies. Poor business performance will most likely lead to the need to cut costs which is usually in the form of reducing the workforce. If workers feel that there is any threat of redundancy, the possibility of losing their jobs may well cause conflict. While introducing flexible working practices may be suitable for some employees such as part-time workers, others who might face restructuring or redundancies will insecure.
Unresolved issues from the past. Conflict often occurs because people ignored the feelings of others in the business organization. Those that felt let down or upset when others disagreed with their ideas or opinions will hold grudges and grievances often leading to permanent conflict. This is because it is difficult to separate professional life from personal life as well as people find it hard to forget and forgive those who they feel have been ‘bad’ to them.

Example 1: Cause of conflict: Business change, e.g. relocation or new technology

Common management view: Change is necessary to remain competitive and profitable.

Common employee view: Change can lead to job losses, may result in retraining in new skills that causes uncertainty over ability to cope. Demands for increased flexibility from staff may reduce job security.

Example 2: Cause of conflict: Rationalization and organizational change

Common management view: Business needs to cut overheads and be flexible and adaptable to deal with globalized low-cost competition.

Common employee view: Cost cuts and rationalization always seem to fall on employees – not the senior managers or owners of the business. Reduced job security will damage employee motivation.

In summary, generally, sources of workplace conflict relate to money, working conditions, benefits, workload, job security, safety at work, promotion opportunities, power struggle, change, personality clashes, miscommunication, misunderstandings, rules and policies, etc.