Diversity, Conflict, and Organizational Effectiveness

by Rory Mullett, Vice President, Workforce Issues Practice Area

According to a survey of HR thought leaders by the Human Resources Planning Society, change management, culture management, organizational effectiveness, and team building are some of the most highly valued HR competencies (Eichinger, Ulrich et al 1997). Ironically, although these competencies all require effective diversity management (Norton and Fox 1997), the same HR leaders ranked diversity issues relatively low in terms of importance.

The literature commonly recognizes a symbiotic relationship among diversity, conflict management, and organizational development (Costantino and Merchant 1996, Cox 1993,

Kay 1994, Manz and Neck 1995). Diversity is a broader concept than conflict in the sense that people can have differences without being in conflict. Nevertheless, if it can be said that an organization effectively utilizes and manages difference, the same conclusion would apply to conflict and vice versa. It follows that a diversity culture is necessarily friendly to difference and conflict. The connection that needs to be made for business leaders is how what we call “valuing diversity”—that is, openness to difference/conflict—enhances organizational effectiveness.

General Benefits of Difference/Conflict-friendly Culture

Conflicts can stimulate learning and change, guard against lethargy and a tendency towards “group think,” and encourage innovation by forcing parties to search for solutions to underlying problems. Conflict facilitates processes of mutual accommodation through the exploration and resolution of differences. For example, executive teams that experience more conflict perform better than those with low levels of conflict because they gain a deeper understanding of strategic issues and come to more creative decisions (Eisenhardt, Kahwahy, et al 1997).

Critical Thinking

Conflict-resolution processes facilitate critical thinking on the part of employees and, therefore, also facilitate individual development, cooperation and teamwork, and organizational effectiveness. The positive correlation between conflict-resolution processes and critical thinking becomes evident upon consideration of non-conflict-friendly processes; if conflict is unwelcome, critical thinking will either not take place or not be communicated. Management techniques that draw on critical thinking, and are therefore diminished in the absence of conflict, include strategic planning, effective decision making, creative problem solving, situational leadership (willingness to abandon fixed ways of dealing), entrepreneurial risk taking, R&D activity, team building, and TQM (Brookfield 1987, pp. 138–139).

The consequences of conflict intolerance and failure to engage in critical thinking on the part of executives are that they don’t say what they mean or test their own assumptions, so important issues don’t surface and remain unresolved (Argyris 1986).

The components of critical thinking are (a) identifying and challenging assumptions,


(b) understanding the influence of context, (c) imagining and exploring alternatives, and (d) being skeptical of claims to universal truth or ultimate explanations (Brookfield 1987, pp. 7– 9).

Promoting Greater Individual Responsibility and Teamwork While

Maintaining Control

Personal identities, norms of interaction, and perceptions of reality are less fixed than they once were. Managers need to learn that they can no longer assume consensus on these matters as a basis for interaction, but that they need to achieve consensus while interacting to reach decisions (Deetz 1993, p. 31).

The key is to balance the requirements for (a) greater individual responsibility, usually promoted by internal competition, (b) trust and internal support, promoted by systems concepts such as learning cultures and flexible boundary management, and (c) control. One needs to see the requirements not as contradictory but as positive forces that can be harmonized. There is no one balance that is right for all organizations (Kaye 1994). “[W]hen differing perspectives are present, it is through their dialectical interaction (implying both conflict between them and their simultaneous validity) that qualitative changes in shared frameworks can best evolve” (Bartunek and Reid 1992, p. 117). As in the case of other apparent management dilemmas such as long v. short term focus, creativity v. discipline, etc., the common element is empowerment v. alignment, which requires a never ending balancing act because both ends of the pole are desirable, not one at the expense of the other. The management task is to get people to see the value in both sides, to live with the inherent ambiguity, and to make some sense out of the apparent contradictions (Stewart 1996).

Conflict Resolution and Developmental Growth

Some managers move beyond problem solving and use problems to create larger opportunities, e.g., Honda’s Fujisawa, Ford’s Petersen, and GE’s Welch. “Problems...are not just hassles to be dealt with and set aside. Lurking inside each problem is a workshop on the nature of organizations and a vehicle for personal growth” (Pascale 1990). Well-mediated conflicts can cause one or more of the disputants to reflect on their relative positions, interests, and relationship—not to mention the context in which they find themselves interrelating. (Bush and Folger 1994). Well-mediated conflicts often result in a positive change in the relationship and/or a positive change in perspective on the part of one or more of the disputants, a strengthening of the self, or even an overall increase in human capability to deal with life and its problems by extending oneself cognitively to better understand others.

Organizational Learning

The ability to gain insight from experience is the essence of organizational learning.

Effective learning occurs when people reflect on the consequences of their actions and

thereby gain insight. “Effective learning systems surface differing perspectives to better interpret experience and spark innovation” (Shaw and Perkins 1992, p. 177).


Senge defines a learning organization as a place where people are continually discovering how they create their reality and how they can change it. He argues that learning to learn is critical to organizational survival and growth in today’s turbulent environment. The five disciplines required for organizational learning are

  1. Personal mastery—gap analysis, on the part of individuals, between the current situation and a desired future state and the development of a plan to close the gap
  1. Mental models—deriving models of the relationships among phenomena and making productive use of the models
  1. Shared vision—eliciting a collective view of a desired future state for the organization
  1. Team learning—searching for synergy
  1. Systems thinking—thinking holistically, identifying patterns and relationships, integrating the other disciplines

Disciplines 1 and 2 focus more on individuals; 3 and 4 do so more on groups. Discipline 3 is not an exercise in senior management prescription but in participative/collaborative future shaping. Senge also identifies six barriers to change:

  1. Positional myopia—obscuring individuals’ understanding of their linkage with the larger system
  1. A perception of powerlessness—seeing obstacles as beyond one’s control
  1. Failure to recognize one’s own contribution to the problem
  1. Focus on the short term to the detriment of longer-term considerations
  1. Difficulty seeing trends (longer term, gradual processes)
  1. Misperceiving experience as learning; failure to adequately reflect

The objective is an open system, i.e., “an organization where it is safe for people to create visions, where inquiry and commitment to the truth are the norm, and where challenging the status quo is the norm—especially when the status quo includes obscuring aspects of current reality that people seek to avoid” (Senge 1990, p. 172). Open systems are “capable of transmuting conflict, or disorder, into positive growth. One might say they learn from conflict, that, in fact, conflict is a necessary and integral part of growth and adaptation. Rather than being the opposite of cooperation, conflict is actually a partner to it” (Beal 1995, p. 28).

Teams play a central role in the knowledge-creating company because they provide a shared


context where individuals can interact with each other and engage in the constant dialogue on which effective reflection depends. This dialogue can—indeed, should—involve considerableconflict and disagreement. It is precisely such conflict that pushes employees to question existing premises and make sense of their experience in a new way (Nonaka 1991, p. 104).

Facilitation of Cooperation and Teamwork

Teams generate conflict; teambuilding is not possible without conflict resolution (Kaye

1994, p. 18). Teamwork competency is being “[a]ble to develop cooperation and collaborative work efforts toward solutions that generally benefit all parties. ”The behavioral indications are that the participant/team member “[a]cknowledges and works through conflict; does not remain silent or withhold differing opinion” and “[a]ppropriately expresses his/her own opinion” (Klein 1996).

Focusing Attention on Process

A key to the success of any team is the capacity of the group’s members to reflect on the team’s processes, to learn from their reflections, and to change the team’s processes as needed (Pancanowsky 1995, p. 47, and Schwarz 1994). In today’s environment, organizations must be able to make conscious trade-offs, and this requires forums where people with diverse perspectives can work together effectively through lateral integrative processes to develop systemic solutions in response to complex, multifaceted choices (Mohrman 1993, pp. 113–114).

Facilitating Change

Change involves conflict. In fact, the essence of change is a process of resolving tensionand conflict within a system. Part of the energy for change is unleashed by dynamicresolution of conflict among various stakeholders in the organization. This is thefundamental mechanism by which the assumptions of the status quo are challenged. Consequently, change involves establishing political mechanisms by which stakeholderscan resolve issues. This includes joint resolution between groups that had previouslyoperated independently and the empowerment of stakeholders who have a differentframe of reference from the keepers of the status quo (Mohrman and Mohrman 1993,pp. 102–103).

The Mohrmans’ view as to what it takes to effect change can be argued to be veryoptimistic. “All learning requires rupture, all real change means crisis for those who areexperiencing it. Learning is impossible in a context of gradual and harmonious evolution”(Crozier and Friedberg 1977, p. 226). Crozier and Friedberg argue that actors wishing toinitiate change must understand the constraints of the system and their freedom to makeuse of available resources; they must endeavor to broaden their margin of liberty. Thisview is consistent with the notion that conflict/difference friendliness facilitates change.

There can be conflict on whether change is necessary, and, even assuming agreement onthe necessity for change, there can be conflict (conscious or unconscious) on its orderand


magnitude. Differences as to the need for and nature of change must be managed ifinterests are to be realized. “When avoidance and toleration dominate the ways individualsand groups deal with differences, existing structures and systems are likely to go unchallenged.” (Bartunek, Kolb et al. 1992, p. 222).

1Disputes over the same organizationalissues continue to surface but are never definitively resolved.

Conflict management becomes a more important managerial skill at higher manageriallevels and as organizations move from the traditional managerial orientation to a more change-responsive orientation, as is indicated by the following table.

Shifting Hierarchy of Managerial Skills

<------Prevailing Management Orientation ------>

Management LevelTraditionalTransitionalChange Responsive







human relations


lower technical

Source: Basil and Cook 1974

Change-responsive Organization

In their now classic study that articulated contingency theory, Lawrence and Lorschestablished, reasonably conclusively, that there is no one best way to organize. Environmental requirements, relative to the particular field of business, determinethe appropriate structure. Uncertainty and rapid rates of change place differentrequirements on organizations than do stable environments. Uncertainty and change elicit differentiation, and the more differentiation there is, the greater the need for integration (i.e., difference management). In higher-performing organizations, the tension between states of differentiation and integration is managed through effective procedures and practices for managing conflict. The critical question is how to achieve integration without

sacrificing differentiation. The determinants of effective conflict resolution vary depending on the specific environmental demands on the organization (Lawrence and Lorsch 1967).

The ideas and findings of Lawrence and Lorsch have not lost their currency over the years.

1For the contrarian view that emergent mediators (unofficial, informal interveners) are more likely tobe able to influence systemic change, see Kolb 1989, pp.107–111.

2Differentiation and integration are both necessary, though people fear the former.

To become sufficiently agile for today’s turbulent environment, organizations must be ableto undergo large scale change and redesign themselves.


The large scale change required for an organization to become a learning organizationentails second order change. Such change is not simply learning to do better that whichis already done (first order change); it entails a change in fundamental assumptions and organizing principles. For example, structures will be perceived as temporary, improvement and change activities will be seen as primary organizational tasks, and decisionmaking will be made intentionally political by the purposeful exposure of conflictamong different perspectives (Mohrman and Mohrman 1993, p. 107).

Conflict-handling approaches are part-and-parcel of existing perspectives. Therefore, ifsecond order change is to be accomplished, conflict-handling patterns probably have to bechanged too (Bartunek and Reid 1992).

The Bottom Line

To attempt to enhance organizational effectiveness by managing culture and facilitatingchange without focusing on the management of difference and conflict is futile. The failure of HR thought leaders to recognize the importance of diversity explains the gap betweentheir perceptions of organizational competency priorities and their ability to facilitate thedevelopment of these competencies.

2Collaboration has costs as well as benefits. It takes a lot of time and energy. Whether it bringssufficient added value depends on the nature of the task (Mintzberg, Dougherty et al. 1996).


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