Principles of Business

Conflict
Conflict- can be described as a dispute or disagreement between two or more people in an
organization that disrupts personal or organizational goal from being achieved.

Internal Sources of Conflict: (Read page 58 in your textbook for examples as well)

 Poor working conditions- if conditions are unsafe and unhealthy, then there is likely to
be conflict between managers and the workforce.
 Levels of workers’ pay- if rewards and pay are low or unequal, then, this can lead to
conflict among employees and between employee and management.
 Unequal or inequitable treatment – persons may feel that they are not being treated
fairly or being discriminated against because of gender, age, a disability or their position
in the organization. This can lead to chaos.
 Business change- this includes moving to a new location or new procedures for
executing a task. Conflict may arise between those who can see the benefits of the new
ways of operating and meet the new requirements, and those who cannot and prefer to do
things the old or normal way.
 Cutting cost- the business may cut employees benefits, hours and pay during slow
seasons. This is to aid in the business staying profitable and competitive. However,
employees may not like this scheme thus resulting in conflict between employees and
management.
 Breakdown in communication- there may be poor communication between departments
due to clashing of priorities, personalities, and interpersonal skills. This can result in
information and processes being delayed and miscommunicated. This can therefore cause
conflict.
 Age gap – relationships between old and young employees can sometimes be strained as
a result of lack of understanding between parties on an issue.
 Informal groups – the formation of an informal group can lead to conflict in an
organization. Members follow group norms or guidelines that are not in line with the
organization’s goals but based on those of the informal group.

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  Individual differences – people have different attitudes, personalities and stress levels
and these may create clashes at work.
 Role conflict – when a person is not clear on what he/she is supposed to do in the
organization.
 The nature of work activities – where the task or job of one person is dependent upon
the work of others, there is potential for conflict if there is no collaboration and co-
operation.
 Differences in perceptions – people view things in different ways and this could lead to
conflict.
 Limited resources – resources are limited and departments have to compete for their
share. Some departments will get what they’ve requested and other may not. This can
lead to conflict.

Overall Strategies for Managing Conflict:

 Clarification of goals and objectives – people need to be aware of what they have to
achieve, their role and functions. This will help to minimize potential conflict.
 Resource distribution – ensures that to some extent people are provided with the tools to
do their jobs.
 Develop proper policies and procedures – ensure that policies for Health and Safety,
Promotion and Discipline are fair to employees.
 Develop interpersonal and group process skills – encourage people to work through
situations.
 Leadership and management – choosing an appropriate leadership style suited to the
situation that is likely to assist in dealing positively with conflict.

Employee Strategies to Resolve Conflict:

There are a number of strategies or industrial action that employee could use to increase their
power during conflict to aid in resolving the conflict and improving their working conditions.
The strategies are known as industrial action.

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  Go slow- this is a form of industrial action where employees keep performing the duties
but as the minimum pace as demanded by their contract. Employees payments may be
lost, but management loses more.
 Overtime Bans- workers refuse to work more than the contracted number of hours.
During busy times of the year, this could lead to significant loss in output for the
employer.
 Strike action – employees refuse to work and may even picket or protest outside of the
business with placards. This draws attention to the issues at the business.
 Work to rule – every rule or regulation of every process and procedure is carried out
exactly. This has the effect of slowing down the work processes.
 Executing a sit-in – workers come to work and sit.
 Using a sick-out option – all workers declare that they are sick and cannot come to
work.
 Picketing – marching outside the business with placards.

Employer Strategies to Resolve Conflict:

 Lock Outs – employers lock the premises so that employees cannot enter. The idea is
that if they are not at work; they are not paid and they cannot hinder or sabotage the
premises. However, the business loses productive time.
 Threat of redundancies- the employer would threaten to terminate or fire
employees. These threats would put pressure on unions to agree to a settlement of the
dispute. However, the employees may look at this as bullying and lead to poor
publicity for the employer.
 Changes of contract- the employer may issue new contracts with more duties
including some overtime work. This is done when the old contract is due for renewal.
 Closure- temporary closing of the business where the industrial dispute took place.
This would lead to redundancy for all workers and no output and profit for the
business owners.

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  Negotiations- employee and employer reach a compromise solution. If conflict is not
resolved here then third party resolution strategies would be required.
 Engaging strike breakers – employers try to negotiate with workers who turn up to
work during periods of strikes. These workers are called ‘Scab labour’ or ‘black legs
workers’.
 Union busting – when employers try to prevent employees from joining or forming a
union.

** Industrial Action- measures taken by the workforce or trade union to put pressure on
management to settle an industrial dispute in favour of employees.

**Trade union – an organization made up of workers who are known as members. The aim is to
protect and advance the interests of the members in the workplace.

** Shop Steward- the union representative in the organization. This elected member is
responsible for performing collective bargaining for union members with management.

** Collective Bargaining- negotiations between representatives of workers and employers.

Benefits of trade unions to workers

 Collective bargaining by union representatives on behalf of workers gives “strength in

unity’.
 Individual workers have very little bargaining power
 Industrial action taken by all union members can be very effective.
 Unions will support workers with legal advice if individuals feel they have been badly
treated at work or if the employer has broken employment laws.

Benefits of trade unions to employers

 Negotiations over wages and working conditions can take place with a union
representative rather than many individual workers- saving management time.
 An agreement reached between employers and unions is more likely to be accepted by
most workers- the union may encourage workers to accept the agreement to resolve the
dispute.

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  Unions can provide an effective communication channel between managers and workers.

Third Party Conflict Resolution Strategies:

Sometimes employers and employees are unable to reach a resolution in a dispute. Therefore,
they have to look to third-party options which helps avoid costly court proceedings. When this
occurs the parties can turn to the options available under what is termed a grievance procedure.

A grievance procedure is a process through which a dispute can be settled. This can be a short or
lengthy process depending on how soon the dispute is ratified. There are three main stages of the
grievance procedure. These are:

 Conciliation
 Mediation
 Arbitration

The idea is that if the first stage fails, then the parties would move to the next stage.

1st stage Conciliation

At this stage, a third party will be asked to sit in on the discussion between both parties. The
conciliator will not offer a solution to the dispute but instead will encourage both parties to come
to an agreement.

2nd stage Mediation

At this stage, a third party will be asked to sit in on the discussion but unlike in conciliation, the
mediator will give suggestions on how to resolve the dispute. The parties will then deliberate on
the suggestions in an attempt to reach an agreement.

3rd stage Arbitration

This is the final stage of the grievance procedure. It is where a third party, termed the arbitrator is
called in to come up with a solution to the dispute that has been going on. Unlike the previous
two stages, the arbitrator will give a solution to both parties. This solution is legally binding.

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Case Study 2.1

Safeguard Cabinets Ltd

James Bradshaw, the union representative responsible for pay negotiations at Safeguard
Cabinets, was planning to call a strike of all of his union members. ‘The management has
negotiated with us but they refuse to increase their pay offer of 5 per cent. We are asking for
10 per cent and longer holidays. My members work very hard yet are paid less than workers
in other cabinetmaking firms. The only way to make managers see sense is to call a strike.

The personnel manager had told joe: ‘We need to be responsible about these negotiations.
The business wants a motivated workforce but as profits are falling we cannot afford a rise
above the level of inflation- 5 per cent a year. I suggest that we go to an independent
arbitrator. I am very keen to avoid a strike as out customers will just not wait for goods that
they have ordered.’

1. What is meant by the following terms? (6 marks)

a. Trade union
b. Strike
c. Arbitration
2. Explain why a strike could damage the business’ reputation. (2 marks)
3. Besides a strike, state TWO other strategies that can be used by employees to deal with a
conflict. (2 marks)
4. Explain ONE benefit to workers of belonging to a trade union. (2 marks)
5. Do you think that this dispute should be resolved by an arbitrator? Explain your answer.
(3 marks)