What Is Organizational Conflict?

In business, personalities or worldviews collide and arguments inevitably ensue. Usually, business owners can manage these interpersonal conflicts with informal mediation or by reassigning personnel to different areas of the business. At times, though, the conflict centers on the business itself. This kind of organizational conflict can either hinder the business or offer a chance for improvement.

A basic definition of organizational conflict is disagreement by individuals or groups within the organization, which can center on factors ranging from resource allocation and divisions of responsibility to the overall direction of the organization. A common example of organizational conflict occurs when workers advocate for higher pay and the business owner or management wants pay levels to remain the same.

In one view, organizational conflict produces negative outcomes. Conflicts cause stress, which reduces worker satisfaction. This diminished satisfaction can lead to increases in absenteeism and turnover. Conflict can also diminish trust in supervisors and fellow employees, which can slow or stop progress on projects. The pileup of internal negative consequences, such as lost trust and slowed progress, can generate a negative impact on customer satisfaction due to missed deadlines and reduced work quality.

In a different view, organizational conflict represents an opportunity for productive change. The use of effective communication lies at the heart of this view. Organizational conflicts develop for a reason. By acknowledging the existence of the conflict and divining the source of it, the business leadership opens the door for creative solutions. The simple act of acknowledging and seeking solutions to organizational conflicts can defuse them and draw employees into a stronger relationship with the business. It can also encourage an adaptable organization that copes efficiently with the rapid changes faced by modern businesses.

In some cases, no agreeable resolution for all parties involved in a workplace conflict exists. If, for example, business co-owners see the business developing in two fundamentally different directions, no solution will satisfy both parties. Solving organizational conflicts that involve different visions for the business usually requires one of parties to leave. Every business faces limited resources and demands that exceed them. At a certain point, business owners must simply deny requests for more money. An explanation can soften the blow and provide acknowledgement, but the conflict may linger in spite of any attempt to resolve it.