A large number of potential sources of conflict exist in organisational life as antecedent conditions and realistic basis for some conflicts. Some of the major sources of conflict are :

Competition for Limited Resources

Any group exists for the purpose of attaining some goals with the help of available resources. These resources may be tangible like men, materials, and money or intangible like power, status or the manager’s time. No organisation is capable of providing all the resources demanded by various units. Resources are limited and different groups have to compete for these scarce resources and many conflicts arise from this source.

Diversity of Goals

Groups in organisation have different functions to perform and as such they develop their own norms and goals. Theoretically the achievement of these goals should achieve overall organisational goals but, often, in real life the reverse is true. Goals of one group are incompatible to the goals of another group. Take, for example, a company which manufactures electric fans that has a seasonal demand. Three departments marketing, production and finance-are involved. Since the demand for the product is seasonal, the marketing manager would like to have sufficient stock during the season. The production department has to gear up its capacity during the season but because of a tight labour market finds it difficult to hire labour temporarily and resorts to employ people on a permanent basis. This creates another problem. The finance manager says that as the storage costs are high it is expensive to keep stock build up in the slack season, and maintaining the production line during slack season imposes an additional burden.

This example shows that each department develops its own goals, which may conflict with another department’s goals and one department may try to achieve its goals at the expense of another. This happens quite often when the reward system is linked to group performance rather than to overall organisational performance.

Task Interdependence

Groups in an organisation do not function independent of one another. They have to interact with one another in order to accomplish their tasks. The sales department will have nothing to sell unless the production people produce goods and goods cannot be produced unless the financial department comes up with the money to buy raw materials. Thus smooth interaction between various groups is essential for the efficient functioning of the organisation. Three types of interdependence can cause intergroup conflict-pooled, sequential and reciprocal.

Pooled interdependence exists when two work groups may not directly interact with each other but are affected by each other’s actions. For example, when one independent product group performs poorly, all other groups may suffer financially, This can happen when rewards are contingent upon collective performance.

Sequential interdependence occurs when one group’s performance depends on another group’s prior performance. In a construction project, for example, the excavating team must prepare the foundation before the masons can work on the building structure. Since the masons depend on the excavators, conflict between the groups can occur when the excavators’ work is delayed.

Reciprocal interdependence occurs when two or more groups are mutually interdependent in accomplishing their tasks. For example, in developing and marketing a new product, three major departments (marketing, production and research) depend on each other to perform their tasks. Information possessed by one department is needed by another department. For example, the research department needs market information from the marketing department, and marketing needs research to provide customer services. When one group is unable to meet the expectations of another group, intergroup conflict usually results.

Differences in Values and Perception

A lot of conflict is generated within organisations because various groups within the organisation hold ‘conflicting’ values and perceive situations in a narrow, individualistic manner. An example that comes readily to mind is that of the managment-labour conflict. Labour feels that management is exploiting it because in spite of making a profit, management does nothing for the economic welfare of labour. On the other hand, management feels that the profits should go to cash reserves so as to make the company an attractive proposition for investors. Another example is the conflict between engineering and manufacturing. Engineering lays stress on technological sophistication and precision and is accused by manufacturing of designing products that will last for 50 years but that the customers cannot afford. Similarly, engineering accuses manufacturing of making products of such limited durability that the company’s reputation suffers.

Organisational Ambiguities

As implied, conflict may emerge when two organisational units compete over new responsibility. Intergroup conflict stemming from disagreement about who has responsibility for ongoing tasks is an even more frequent problem. Newcomers to organisations are often struck by the ambiguity that exists about job responsibilities. Few organisations make extensive use of job descriptions or periodically update the job descriptions that do exist. Further, it is rare that the manager or employee consults his own job description. Managerial and staff jobs by their very nature are difficult to structure tightly around a job description.

Introduction of Change

Change can breed intergroup conflict. Acquisitions and mergers, for example, encourage intergroup conflict, competition, and stress. When one organisation is merged into another, a power struggle often exists between the acquiring and acquired company. An attempt is usually made to minimise conflict by laying out plans for power sharing before the acquisition or merger is consummated. Frequently, the acquired company is given representation on the board of directors of the acquiring company. Nevertheless, power struggles are difficult to avoid.

Nature of Communication

One of the major fallacies abounding about conflict is that poor communication is the cause of all conflicts. A typical statement is: “If we could just communicate with each other, we could eliminate our differences”. Such a conclusion is not surprising considering the little time most of us have at our disposal communicating with one another. At the same time, evidence does suggest that problems in the communication channel such as noise, distortion, omission and overload do affect the process of collaboration and lead to misunderstanding. The potential for conflict increases when either too little or too much communication takes place. Apparently, an increase in communication is functional upto a point, where after it is possible to over communicate with a resultant increase in potential for conflict. Too much information as well as too little information can lay the foundation for a conflict;

Aggressive Nature of People

Another factor that has a large potential for generating conflict within an organization is personality characteristics that account for individual idiosyncracies and differences. Evidence suggests that certain personality types-for example, individuals who are highly authoritarian, arrogant, autocratic and dogmatic-lead to potential conflict. People have a natural need to find an outlet for their aggressive tendencies. Organisations are sometimes used as arenas for expression of aggression-‘blowing off steam’-leading to conflict.

This discussion on the sources of conflict is intended to emphasise that it is not possible to design an organisation which will remain conflict-free for all times to come. Conflict is inevitable in an organisation as some of these sources will always remain in any organisation. However, these sources are not to be confused with the causes of a conflict. A conflict, in ultimate analysis, is caused by perceptions and feelings people experience when an incompatibility exists between what they want and what someone else wants. When perception of incompatibility and feeling of frustration generate actions, conflict is manifested.


The conflict can have both positive and negative impact on individuals, groups and organisations. For example, as a result of intergroup conflict, certain changes occur within groups and between groups. Some changes have positive effects, others have negative effects. Let us explore this issue with Edgar Schein (1980) who has compiled a list of changes on the basis of research findings.

As a result of intergroup conflict some changes that may occur within the groups involved are:

1 Group cohesiveness increases-The group becomes more closely knit; its members show greater loyalty.

2 The group becomes task-oriented- Group climate changes from informal to task-oriented in order to deal with the external threat.

3 Leadership becomes more directive- As the group becomes more task-oriented, the leader becomes more authoritarian.

4 Organisational structure becomes more rigid- Authority and responsibility relationships among and between members become more clearly defined.

5 Group unity is stressed. The group demands increasing loyalty and conformity from its members.

Prolonged group conflicts cause the following changes in relationship between groups:

1 Groups become antagonistic toward each other- Each group sees the other as an enemy who interferes with its goal-oriented behaviour.

2 Perceptions are distorted – Each group develops positive perceptions about its own group and negative perceptions toward the other.

3 Communication ceases to exist- When in conflict members of one group avoid interaction with members of the other. If they are forced to interact, they tend to show hostility and aggression towards each other.

4 Groups apply a double standard- Each group clearly sees all the vicious acts of the other party while remaining blind to the same acts performed by their own group.

From the above two lists of changes within and between groups in conflict, you can spot a number of negative effects. What about some potential benefits of intergroup conflicts? Here is such a list:

1 Conflict clarifies the real issue- When people of groups express their concerns and differences; it helps sharpen the real issue involved in a problem. Without conflict, many organisational problems go unnoticed and remain unresolved.

2 Conflict increases innovation-  Conflict generates a greater diversity of ideas and viewpoints. Such a diversity can stimulate innovation in organisational practices.

3 Intergroup conflict solidifies the group. When members of a group are faced with an external enemy, they tend to work together more closely to deal with it. A manager may use this new cohesion to reduce internal conflicts.

4 Conflict serves as a catharsis. Conflict can provide an outlet through which organizational members can ventilate their feelings without damaging organisational functioning.

5 Conflict resolution solidifies intergroup relationships. Once group conflict is successfully resolved, it can solidify the relationships between groups and it may even make the groups feel closer to each other.

Looking into some of the effects of conflicts you can take a balanced view to conclude that conflict is inherently neither good nor bad but simply has the potential to improve or impair an organisation’s performance through its consequences. Conflicts that result in increased organisation performance and help an organization to attain its goals may be termed as Functional. On the other hand, conflict that hinders an organisation’s growth and prevents it from achieving its goals can be termed as Dysfunctional. Thus conflict in certain forms can be functional or dysfunctional depending upon its nature, intensity, duration and the manner in which it is handled.

You may ask: How do I know whether a conflict is functional or dysfunctional? On what criteria should I base my judgment about the value of conflict?

It is true that the demarcation between functional and dysfunctional conflict is neither clear nor precise. No particular level of conflict can be adopted as acceptable or by the impact it has on group/unit performance, rather than on a single individual. Criterion for you to base your judgment upon is unit performance. Since a group exists to achieve certain predetermined goals, the functionality of a conflict can be measured by the impact it has to group/unit performance, rather than on a single individual. Figure II shows the relationship between organisational conflict and group or unit performance.

Figure II: Organisational conflict and unit performance

conflict-performance graph

The figure shows that there is an optimal, highly functional level of conflict at which the unit’s performance is at the maximum. This can happen because at that level of conflict the group or the unit’s internal environment is characterized by self-criticism and innovativeness. When the conflict level is too low, it is dysfunctional as the unit’s performance is low due to apathy, stagnation, lack of new ideas and non-responsiveness of the unit-members to the demands of change. In such a situation, a manager may have to resort to stimulating conflicts to make the unit more viable On the other hand, when the conflict level is too high, it is again dysfunctional, as the survival of the group or the unit is threatened owing to diversion of energies away from performance and goal attainment activities of the members. Chaos and disruption prevails. Naturally, the most important managerial task becomes how to resolve the conflict.

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