Steps for Setting Up an Effective Conflict Management System

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Product and process. These are the two areas of focus for any successful business. As a business owner or manager, your primary focus is naturally on the products or services that your business provides for your clients and customers. But an integral part of a product or service is the process by which it is produced and delivered. The process will determine the product’s quality and its cost. And process has largely to do with how your people work together.

This people part is often the hardest part. When there are problems among employees, they can be more challenging to fix than mechanical problems or information systems snafus.

A recent study showed that 42% of a manager’s time is spent on reaching agreement with others when conflicts occur. (Watson, C and Hoffman, R (1996) ” Managers as Negotiators,” Leadership Quarterly 7 (1) 1996)

A number of surveys have indicated that people in all occupations report that the most uncomfortable, stress-producing parts of their jobs are the interpersonal conflicts that they experience on a daily basis between themselves and co-workers or supervisors.

According to another recent study, in the typical organization over 60 days of productivity are lost per person every year due to conflicts and misunderstanding among co-workers or between workers and their bosses.

As people work together, we know that conflicts will happen. Wishing they wouldn’t happen or ignoring them is not a cost-effective corporate strategy. The delivery of your product or service will be enhanced by establishing an effective conflict management system. Surveys of corporations demonstrate that the likelihood of costly and disruptive employment-related litigation increases to the degree that there are not effective procedures and skills-development programs in place to handle workplace conflicts constructively. A joint Equal Employment Advisory Council and Labor Policy Association 1995 survey produced results indicating that the creation of effective dispute management systems results in a significant reduction of employment related litigation and associated costs.

Handled effectively, conflicts are opportunities to improve the system and the relationships. Every conflict provides important information that can be used to make the incremental improvements that are a necessary part of any high-performing team.

There are four basic principles that underlie a corporate conflict management system:

• Conflict prevention is the first goal. It is literally true that an ounce of prevention is worth a pound of cure.


• When conflicts do happen, they should be resolved as quickly as possible. The longer they remain unresolved, the more drain they put on performance.


• Conflicts are best addressed as directly as possible with those who are involved. Corporate culture and employee training should support this goal.


• Conflicts should be dealt with at the most informal level of dispute resolution possible. Arbitration and litigation are always options for resolving conflicts. But better that a conflict be resolved through informal dialogue between the parties or in mediation than having to resort to the more formal alternatives. This principle follows from the previous two. Solutions at the less formal levels will be less costly and more satisfactory.

An effective conflict management system is made up of four main components:

• A corporate policy tied to corporate values and corporate objectives


• Documentation of the conflict management program


• Promotion of use of the program, including training of all staff in the details of the program and in communication and conflict resolution skills, as necessary


• Regular monitoring, evaluation, and course correction of the program

1. A corporate policy tied to corporate values and corporate objectives

When an organization realizes that an effective conflict management system serves its interests and helps to fulfill its mission, it will be more likely to incorporate it into the corporate culture.

2. Documentation of the conflict management program

The specifics of the conflict management system must be documented in the Employee Handbook, in Policy Manuals, and in materials that are used for new employee orientation.

3. Training

Employees should receive a clear explanation of how the system is structured, the objectives and expectations, and the anticipated benefits. The specific elements should be described and explained. For example, because mediation is an important option in any conflict management system, staff should become familiar with what mediation is, how it works, what a sample mediation agreement looks like, that it is voluntary and confidential, how it is initiated, the role of the mediator, etc.

Additionally, staff may benefit from training in communication, negotiation, conflict resolution, and problem solving skills that will allow them to achieve the four basic principles listed above and help them utilize the steps in the system more effectively.

Training will contribute to the development of a corporate culture that is conflict-friendly and conflict-competent by creating common expectations about communication, conflict resolution, and problem solving.

4. Monitoring, Evaluation, and Course Correction

Periodic (annual?) check-ins on how the system is working and what could make it better will keep it alive and functional. There is a negative impact on morale when a program is instituted but not used or used but not effectively. Staff can be involved in the refinement and implementation of the system.

A conflict management system is designed to provide staff with the understanding, skills, and structure to handle conflicts early and effectively and to prevent costly escalation.

The benefits include:

• Reduced EEO complaints and employment related law suits


• Disputes resolved effectively and efficiently with resulting improved productivity and morale


• Lower staff turnover


• Higher level of confidence among staff that conflicts will be handled effectively


• Better relationships between management and staff and among all staff

A corporate conflict management system is the process maintenance program that will allow you to keep delivering your high quality product or service.