RELATIONSHIP BETWEEN CONFLICT MANAGEMENT STRATEGIES AND ECONOMIC GROWTH OF AN ORGANIZATION

RELATIONSHIP BETWEEN CONFLICT MANAGEMENT STRATEGIES AND ECONOMIC GROWTH OF AN ORGANIZATION

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RELATIONSHIP BETWEEN CONFLICT MANAGEMENT STRATEGIES AND ECONOMIC GROWTH OF AN ORGANIZATION

Abstract

Conflict management is a significant part of an organization to identify the cause of conflicts, factors contributing to conflicts, types, and how to manage them. Conflicts affect the organization negatively; thus, the right conflict management strategies should be implemented. This study purposes of investigating the relationship between economic growth of an organization and conflict management strategies. It adopts a descriptive research methodology with qualitative and quantitative data. The population was random employees from different organizations sampled using a stratified random sampling technique narrowed to 85participants. Results indicated that lack of communication was the leading cause of communication, and conflict within individuals was the most common type. Collective bargaining was the most effective conflict management strategy, and it proved that there was a significant relationship between economic growth and integrative conflict management strategies. Integrative techniques such as collective bargaining, compromising, and accommodation proved to affect economic growth positively.

Keywords and Phrases: Conflict, conflict management, conflict management strategy, organizational performance, collaborative strategy, economic growth

Introduction

Conflict is inevitable in every organization, which is a disagreement between individuals with an actual or perceived difference in beliefs, opinions, values, needs and interests. Each organization has encountered conflicts interpersonal, interdepartmental, organizational or between individuals (Ajike et al. 2015, p.4). These conflicts are mainly due to how daily operations run, division of labour and amount of time spent doing the work. Individuals, departments, and organizations clash because of competing demands and needs (Longe 2015, p.92). Also, conflicts arise because of sharing resources. Resources are always scarce in organizations, and during sharing, they may clash due to how the resources are used. Lack of communication causes misunderstandings and conflict. Minor issues such as jealousy, the struggle for power and favour, and personalities also cause conflicts (Mahato, & Ogunlana 2011). Conflicts in an organization result to less production, less engagement, job dissatisfaction, absenteeism, company reputation, organization’s performance and eventually result to the reduced economic growth of the organization (Sudhakar 2015, p.232). Parties with disagreements shift their focus on the conflict instead of their production in the organization therefore slowing economic growth therefore conflict management is vital.

According to Salolomo and Don-Solomon (2016), conflict management is essential to solve any type of conflict in the organization and each organization should integrate conflict management systems in their organizational systems. There are several ways to manage conflict: avoidance, compromising, collective bargaining, accommodating, competition, and collaborating. Conflict management solves the differences between the two parties thus preventing mental strain, discontentment, competitive struggle, discontentment and distorted perceptions (Arifi 2018, p.197). Effective conflict management improves communication in the organization, improves personal and organizational performance and improves economic growth of the organization (Bvumbwe & Thwala 2011). Economic growth of an organization refers to the development; well-being and quality of life in the organization have improved.

Economic growth in organizations is determined by the quality of the relationships in the organization, its productivity, performance in the industry and overall profitability. Each organization experiences conflicts but successful organizations continuously implement suitable conflicts management strategies (Olu, & Dupe Adesubomi 2014, p.70. Despite the presence of conflict management boards in organizations, there have been many cases of conflicts ongoing and unresolved in the workplace disrupting economic growth of the organization therefore this research aims to establish the relationship that exists between the economic growth of an organization and conflict management strategies (El-Adaway & Kandil 2010, p.315). This study will identify various conflict management strategies and their importance in the organization’s economic growth.

Ideally, each organization should have a conflict management board to notice and resolve any conflicts amongst the employees using the appropriate strategy. However, most conflicts in the organization end up unresolved, because of lack of a conflict management board in the organization and use of inappropriate strategies to solve the conflicts. Each strategy of conflict management has a suitable situation to apply but insufficient understanding of these strategies and their effectiveness results to lack of resolving disputes. Lack of effective conflict management affects the daily operations of the organization. Individuals and their performance are affected by the conflicts in the workplace as it affects their mental abilities, their satisfaction, productivity and performance in the organization (Nwosu, & Makinde 2014, p.28). Consequently, employees’ performance affects the overall organizational performance, productivity, reputation, and profitability, which define the organization’s economic growth (Howell (2014, p.20). Employees play a vital role in the organization’s well-being and they are the company’s biggest assets thus conflict management is essential to maintain a healthy workplace with a satisfied workforce that improves the productivity of the organization (Mahato & Ogunlana 2011). Therefore, this research study purposes to investigate the relationship of economic growth of an organization with strategies of conflict management. The study seeks to answer the research questions below:

• What causes conflicts in an organization?
• What are the main types of conflicts in an organization?
• Which are the most commonly used strategies of conflict management in an organization?
• What is the relationship between conflict management strategies and the economic growth of an organization?

The significance of this research study is to show strategies of conflict management and their effectiveness in an organization to guide managers on the best conflict management strategy in certain situations. This research will guide managers on the importance of conflict management to individual productivity, performance and economic growth of the organization. This study will also guide other researchers for reference when investigation the relationship between strategies of conflict management and economic growth of an organization or performance. However, this study fails to take into account any cultural factors of any particular location or industry thus too broad. The findings in this study are limited to the research design for collecting data and analysis. The study is also limited in that the sample size could have been larger considering there was no specific location or industry for the research scope. A sample of small size may affect the generalizability of the findings in the study (Maiti & Choi, 2018 p.16).

Background

Disputes and conflicts are inseparable from an organization thus each organization needs to integrate a conflict management board in their systems. Conflicts occur in organization because of sharing resources, lack of communication, unhealthy competition and personal misunderstanding. Conflict management refers to the action taken to solve and minimize disputes in an organization. Conflict management strategies have been in existence for a long time since there are past studies that still purposed to identify their relationship with organizational performance and economic growth (Prasad, & Radhika 2018, p.76). There has been a remarkable relationship between conflict management strategies and the general well-being of the organization.

Conflicts result to misunderstanding in the workplace and mental issues of the parties concerned. Communication halts and the two parties stop working together because of their conflicts. Conflicts prevent teamwork, which is the best way of achieving organizational goals effectively. Conflicts disrupt the normal peace that was in the workplace making the work environment hell for the parties concerned who in result avoid it. It increases absenteeism and reduces the production of individual employees. Conflicts cause misunderstandings between individuals, departments and organizations thus affecting their performance. When performance reduces, the organization’s performance reduces as well and eventually affecting its economic growth. Solving conflicts is healthy to reduce misunderstanding in the workplace, promote good relations, a good reputation and increase productivity of every employee, which consequently increases economic growth of the organization. Therefore, there are various conflict management strategies for solving disputes in the organization. Howell (2014, p.20) suggests five commonly used conflict management strategies which entail collective bargaining, accommodating, compromising, confronting, competing and avoidance. Each strategy is used in different scenarios for solving disputes. According to McKibben (2017, p.103) lack of effective conflict management affects the daily operations of the organization.

Theoretical perspectives and conflict management practices

Academic literature provides support for explaining the effect that strategies of conflict management has on the organization performance and its economic growth. Noermijati, Sunaryo and Ratri (2019, p.47) conducted a research to investigate the relationship between conflict management strategies, emotional intelligence, and organization performance in Indonesia. This research study indicated that emotional intelligence acted as a precursor of styles of conflict management for collaborative and integrating style. Conflicts management strategies are determined by emotional intelligence and result to influence of job performance. Conflict management strategies determine the kind of relationships amongst the employees, their communication and their productivity, which finally affect the performance of the organization.

Zaman & Saif (2016, p.35) carried out a study research to investigate whether conflict management strategies and perceived accountability predicted job performance of Pakistan public officials. This study found that conflict management strategies affected the performance of public officials while doing their roles. Consequently, this affected the overall performance of the public sector. This study concluded that the strategy used in managing conflict had a strong effect on the performance of an employee and their productivity, which eventually contributes to the performance of an organization in the end.

Owan (2018) carried out a research study that investigated the role of conflict management strategies on the effectiveness of a teacher’s job in Nigeria. Findings revealed that job effectiveness of teachers was high due to arbitration, negotiation and clear communication. This study indicated that leaders in any setting should implement different conflict management strategies to manage conflicts effectively in the workplace. This study also revealed that conflict management using the right strategy improves the performance of an institution and an organization and improves its economic growth by increasing the well-being of the workplace and the productivity. Effective strategies are necessary to solve disputes and improve economic growth of an organization. Howell, suggests that each organization requires having a conflict management board to manage any conflict in the organization (2014, P.20).

Table 1: Factors effecting economic growth in an organization.

Conflict management strategies

According to Howell (2014, p.20) conflict at work is certain but the result of the conflicts entirely depends on the manner in which conflict is resolved. Volume and intensity of conflicts occurring in an organization is influenced by the method of management. Howell’s study presents five methods of managing conflicts, which include collaborative strategy, compromising, competing, avoiding and accommodating strategy. Competing strategy focuses on the agenda of the conflict other than the relationship of the parties thus has a win-lose approach of solving a dispute. Competing strategy involves prioritizing own needs to the exclusion of others. Maiti, and Choi (2018, p.16) defined collaborating strategy as finding a solution that satisfies both parties, while considering each other’s goals and coming up with innovative ideas that will benefit both parties. This study indicated that collaborative style considered the relationship of the parties as well as the conflict agenda. This study also explained that compromising strategy involves looking for a common ground that partly satisfies both parties since individuals give up their needs for the sake of a neutral solution. This study describes accommodating as a means of solving a conflict by giving up one’s needs to satisfy the other person’s concerns. It has a low focus on the agenda of the conflict and a high focus on the relationship of the parties (Isa, 2015, p.59). Avoiding uses the approach that a discussion is pointless therefore both parties ignoring the problem and having no concern about the problem. This approach fails to consider neither the conflict agenda nor the relationship between the parties (Adetunji, & Adetunji 2018 p.143). Howell described these five strategies as the options to consider when managing conflict in an organization.

Table 2: Conflict management strategies and their effectiveness.

Conflict management strategies conceptual model

Table 3: Conflict management strategies conceptual model

Research methods and data presentation

This research study adopted a descriptive research design. It administered both quantitative and qualitative research methods in the survey because use of both methods provided substantial evidence for the study when combined.

Hypothesis

H1: There is a positive relationship between collective bargaining strategy and economic growth of an organization

H2: There is a positive relationship between accommodating strategy and economic growth of an organization

H3: There is a positive relationship between Confrontation strategy and economic growth of an organization

H4: There is a positive relationship between avoidance strategy and economic growth of an organization

H5: There is a positive relationship between competition strategy and economic growth of an organization

H6: There is a positive relationship between compromising strategy and economic growth of an organization

Sample and data collection

This survey constituted of a population of 315 employees from different organizations in different industries. A sample population of 85 participants was selected from the vast population of 315 employees through stratified random sampling method. A sample size of 85 respondents was enough to collect data from, since they were from different organizations and industries.

Sampling formula:  n = 208² * S.D.²/E²

n = 208² * 21²/4²

n=85

n is the sample

E is the rate of error

S.D. is the standard deviation

To collect data, this study utilized interviews and questionnaires as the methods of data collection. These participants could not all be met therefore they were interviewed through Skype. Interviews enabled us to collect qualitative data therefore used focus group interviews to collect data, in-depth information and experiences from different departmental representatives in different organizations. This focus interviews consisted of four participants out of 85 respondents, with each participant taking 20 minutes for the interview.

We used closed-ended questionnaires with options that the respondents had to choose their answers from and used Likert-scale for the participants to respond on a scale of 1 to 5. The questionnaires were handed to the respondents by electronic mail for ease of access, shortening the distances, saving the travelling cost and saving time. Since these employees are from different organizations, we used their personal E-Mails to send the questionnaires. They were distributed to all the 85 respondents giving them ample time to read, understand and answer the questions in a span of 30days. A follow up was done on each participant to increase the response rate and clarify any part for understanding. The participants were also encouraged to be honest in their responses. These questionnaires were collected via E-mails as well within a month. Use of questionnaires was a good way to reach a large group of respondents while E-mails simplified the work by saving cost, time, and space.

Data analysis, reliability and variability

After returning the questionnaires, their reliability was checked through a test-re-test measure, which confirmed the consistency of the instrument over time. Findings of the questionnaire were tested through Cronbach alpha of 0.05 levels. Cronbach alpha indicated consistency such that the range of the coefficient of reliability variables was 0.78 to 0.88. These values indicated the suitability of the questionnaires thus declaring these questionnaires as valid and reliable. Data collected from these instruments was analyzed through descriptive statistics entailing deriving mean, frequency, standard deviation, percentages and using spearman correlation coefficient for inferential statistics.

Data analysis

Types of conflicts in organizations

This section indicates the various types of conflicts in organizations, their means and standard deviation. The responses indicate that conflicts within individuals are the most prevalent type of conflict in organizations with a SD of 1.28 and mean of 4.79. It is followed by interdepartmental conflicts with a SD of 1.29 and mean of 3.98, followed by conflicts between organizations with a SD of 1.45and mean of 3.72, and the lowest type was interpersonal conflict with the lowest SD of 1.51 and mean of 2.66 as stated in table 4 below.

Table 4: Types of conflicts in an organization (mean and standard deviation)

Conflict management strategies

Data received from the respondents indicate that there are six conflict management strategies utilized in their workplaces. Integrative strategies include compromising, accommodating and collective bargaining. The rest include competing, avoidance, and confrontation strategy. Collective bargaining strategy has a mean of 4.68 and a standard deviation of 1.29, followed by compromising strategy with a mean of 3.93 and a standard deviation of 1.35, followed by accommodating strategy with a mean of 3.88 and a standard deviation of 1.36, which are the integrative strategies. The other strategies include confrontation M=1.74 SD=1.02, competing with M=1.72, and SD=0.77, and avoidance with the lowest mean of 1.59, and SD= 0.87. Respondents rated these strategies on a scale of 1-5 and these results indicate that collective bargaining is the most significant strategy of solving conflict consequently the most common means of managing conflict. These results indicate that collective bargaining, accommodating and compromising are the most used conflict management strategies in the various organizations while the rest are rarely used.

Table 5: Conflict management strategies (mean and standard deviation)

Testing Hypothesis and regression analysis

Relationship between conflict management and economic growth of an organization was done through the Spearman’s correlation analysis. Results pointed out that there is a medium effect between economic growth and conflict management with a significant level of 0.01 and correlation coefficient of 35.5%. This indicates a positive and moderate correlation between economic growth of an organization and conflict management as indicated by table 3 below.

Table 6: Correlational matrix between conflict management and economic growth

Hypothesis testing H1 to H6

Hypotheses were six in total and table 4 indicates the relationship of each conflict management strategy with economic development of an organization. To determine the correlation, a spearman’s correlation analysis was performed for establishing the relationships. For collective bargaining, results indicated a positive significant correlation between economic growth of an organization and collective bargaining strategy with a confidence level of 0.001. This research study therefore accepts the hypothesis that there is a remarkable relationship between collaborative strategy and economic growth of an organization. Confidence levels of compromising and accommodating were 0.005, which indicated a positive and significant correlation. These results accept the hypothesis that accommodating, and compromising has a significant relationship with the economic growth of an organization. However, results indicate negative relationship between avoidance strategy, competing strategy and confrontation strategy. These results differ with the hypothesis that competing, avoiding and confronting strategies have a remarkable impact on the economic development of an organization. To sum up, these results accept H1, H2, and H3 but reject H4, H5, and H6.

Table 7: Correlation matrix between conflict management strategies and economic growth of an organization

Regression analysis

Table 5 represents the regression analysis that helped determine the most effective conflict management strategies in improving the economic growth of an organization. The outcome of the findings indicate that independent variables are the conflict management strategies which entail collaborative strategy, accommodating, compromising, competing, avoidance, and confrontation strategies. The model presented is suitable for regression analysis that is determined via F-statistics. This model indicates the significant and positive correlation with P<.001, and F=12.734. The most efficient variable with the most influence on economic growth of an organization is collaborative strategy with a Beta coefficient of 0.511. The second most influential variable is accommodation strategy with a beta of 0.446, followed by compromising strategy with a Beta of 0.472. Further, confrontation is the variable that follows with a beta of 0.228, competition strategy with a beta of 0.226, and finally avoidance with the lowest beta of 0.213 as indicated in table 5 below.

Table 5: Regression analysis for conflict management strategies

Discussion

Conflict management theoretical model

This research found that presence of conflicts in the organization results to lack of respect, trust and communication, which result to low performance of the employees. Despite the disagreement between two people, conflict may arise within several people, groups, teams and departments affecting production of work and the economic growth of an organization. This research has therefore emphasized the need to manage conflicts in an organization to promote economic growth. According to this study, collective bargaining, avoiding, compromising, confronting and accommodation are the common methods of solving conflicts. The theoretic strategic model indicates that these strategies of dealing with conflict have particular effects on the economic growth. Those that affect it positively and promote growth are appropriate while those affecting it negatively are inappropriate.

Relationship between conflict management strategies and economic growth of an organization

This study tested the hypothesis stated earlier and three strategies of managing conflicts in an organization had a positive remarkable relationship with an organization’s economic growth while the rest of the three had a negative relationship. Collective bargaining, compromising, and accommodating have a positive relationship with economic growth of an organization. These findings accept H1, H2 and H3 as a correct hypothesis. However, avoiding, competing and confronting strategies of conflict management have a negative impact on economic growth of an organization. These findings reject the hypothesis that is H4, H5 and H6. Accommodation, compromising and collective bargaining are integrative strategies, which have a positive impact on the economic growth of an organization. It shows that integrative strategies are the most effective means of managing conflict. This study indicates that all the listed types of conflicts ranging from interdepartmental, organizational, within individuals and interpersonal affect employees and their performance negatively. This study also declared that there is a remarkable relationship and effect of conflict management strategies on the economic aspect of an organization. It explained that if an organization experiencing conflicts implemented any of the three integrative strategies when managing the conflict, it would significantly improve the economic growth.

Significance of integrative methods of conflict management

This study rendered the three integrative approaches of conflict management to be of significant importance in the economic growth of an organization. Integrative approaches should be integrated in the conflict management board for application when solving conflicts in the workplace. These strategies should be utilized because they consider the interest of both parties, suggest better ways of going about the conflict, and consider both parties equally. Significance of integrative strategies arises from its effectiveness in managing conflict thus explaining its tremendous effect on economic growth of an organization.

Conclusion and recommendations

To sum up, conflict in organizations ranges from interpersonal conflicts, within individuals, interdepartmental and organizational conflict. Conflict is inevitable and caused by personal grudges, behavioral issues, errors in documents, sharing of scarce resources, technical errors, and lack of communication. These conflicts have a negative effect on the organization’s economic growth because they result to poor communication, less motivation, and poor performance of an individual and organization as well. Conflict management is therefore significant to prevent these effects from affecting the organization. Some of the conflict management strategies commonly used include collective bargaining, accommodating, compromising, confronting, competing and avoiding. Integrative strategies with a positive effect on the economic importance of the organization are accommodating, collective bargaining and compromising, which promote economic growth. However, the rest have negative effects on economic growth thus should not be implemented.

To avoid conflicts in an organization, leaders and managers should communicate to their subordinates effectively and timely to remove any communication gaps in the workplace that would result to misunderstanding. In addition, there should be a conflict management board integrated in the system and implementing the integrative strategies of management. Besides, board managers should take time to make significant decisions before solving conflicts to ensure they are effectively solved. Their goals should be collective and develop trust in the team while embracing teamwork to ensure that each team member looks out for the other. This study research purposes to reduce conflicts occurrence in organizations, propose ways to manage the conflicts and improve economic growth.

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https://www.tandfonline.com/doi/abs/10.1080/15623599.2018.1536964