Subject Name Paper Name Module Title Module Id Pre- Requisites Objectives. Keywords

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1 Items Subject Name Paper Name Module Title Module Id Pre- Requisites Objectives Keywords Description of Module Human Resource Management International Human Resource Management Management of Conflict Module no.-17 Basic knowledge of what human resource management is. To study the concept of conflicts, causes of conflicts, types and settlement of conflicts Conflict, conflict types, conflict management

2 QUADRANT-I 1. Module 17: Management of Conflict 2. Learning Outcome 3. Meaning and concept of conflict 4. Levels or types of conflicts 5. Causes of conflicts in MNCs 6. Conflict management 7. Summary 1. Module 17: Management of Conflict 2. Learning Outcome: After completing this module the students will be able to: Understand the concept and meaning of conflict Understand the levels or types of conflict Explain the causes of conflicts in MNCs Understand the management of conflict 3. Introduction Conflict means any contradiction or clashing interest between two persons or groups. It is an expression of hostility, negative attitudes, dispute, aggression, rivalry and misunderstanding. Industrial conflict means any dispute or difference between employers and employees, or within employees, which may be concerned with employment, or terms of employment or with working conditions etc. MNCs employ persons from different countries with different cultural, social, political and religious environments. So conflicts may arise due to different perceptions, values, working practices etc. Traditionally, conflicts were viewed as harmful and dysfunctional resulting from poor communication, a lack of openness and trust between people and the failures on the part of managers to be responsive to the needs and aspirations of the employees. Conflicts may result in loss of productivity because of non-cooperation between groups. Conflicts also result in distraction from work and reduction in concentration on work. Hence, as per traditional view conflicts should be avoided. Properly framed tasks, rules, regulations, procedures and authority relationships can identify and correct problems of conflict. Modern view point view conflict as a positive force in a group. As per this view, conflicts are necessary for a group to perform effectively. This approach encourages conflict. There should be a minimum acceptable level of conflict between the group to make it viable, self critical and creative; otherwise the group will never strive for changes and innovations. This type of conflict is called functional conflict. On the other hand, conflicts that hinder group performance, these are dysfunctional conflicts.

3 4. Levels or Types of Conflict Managers in MNCs have to face 20 to 30 percent of their time in dealing with conflict situations. Hence, it is very important that mangers should understand the types of conflict they have ot deal with so that the techniques to deal with these conflicts can be found out. Following are types of conflicts: a. Individual level conflict b. Interpersonal conflict c. Group level conflict d. Organisation level conflict 1. Individual level conflict: all individuals have conflict within themselves. An individual may have conflicts when his motives or drives are blocked or he is facing competing roles and goals and unable to take decisions. The reasons behind these conflicts may be uncertainty about roles and goals, inability to compare various alternatives available and unacceptability to the decisions of company. Following are three types of conflicts that may arise within an employee: a. Frustration: when employee is unable to do as per own desires, he/she becomes frustrated. It is the highest level of dissatisfaction which in turn gives rise to conflict within individual. Frustration arises due to blockage of individual s drives or motives before reaching his/her goal. These blocks may be physical or mental/social-psychological. In case of MNCs, where expatriate has joined foreign subsidiaries, if he/she is not able to work according to his/her own acceptable standards as performed in parent company; he or she may get frustrated. These restrictions may be due to cultural/social or physical environment of the host country or organisation. b. Goal conflict: sometimes, employee may be confronted with two or more competing goals. This type of conflict has both positive and negative features, due to which employee may not be able to take decision regarding the goal to be achieved. If an employee is having foreign assignment or promotion within the parent company, he may be confused between the two. Or employee given promotion but will have to join foreign subsidiary may cause conflict within employee as on one side, there is positive aspect in term of promotion on the other hand, negative aspect in the form of leaving his home and family to join foreign subsidiary. c. Role conflict: every person plays different roles in social and organisational situations and every individual in an organisation is expected to behave in a particular manner while performing a specific role. When the expected role is different from the behaviour anticipated by the individual in that role, role conflict arises because there is no way to meet one expectation without rejecting the other. Role conflict arises, when the role expectations are understood, but due to one or the other reason, they cannot be compiled with. In case of an international assignee, he/she is expected to meet parent company standards in foreign subsidiary also. The roles, their performance criteria etc. are decided in

4 parent country, however, they are performed in host country, there may arise role conflict due to difference in cultural, social and other environmental factors in host country. Where, the international assignee has an understanding of host country culture and environment and also realises that the use of parent country procedures may not work properly in host country, role conflict is likely to occur. 2. Interpersonal conflict: interpersonal conflict refers to conflict between two or more individuals and is the most common type of conflict. The company may create situations in which two individuals are placed in conflict situations. In MNCs there may arise interpersonal conflicts between local manager and parent country manager due to disagreement over goals and objectives, different standards of performance, lack of proper communication and information sharing, different cultures etc. for example, in case of Japanese foreign subsidiaries, generally, communication between parent company and subsidiary takes place in Japanese and is not translated. Host country managers even lack access to communication and unable to participate in decision making. As a result conflicts arise between host country mange and parent country manger resulting into strong consequences like frustrations, or even resignations. 3. Group Level Conflict: Group refers to two or more persons working for some common goal with predefined structure of role and status relations and having a defined system of values and behaviour norms. Groups affect the behaviour of their members along with affecting behaviour of other groups and the organisation as a whole. Group level conflicts are of two types: a. Intra group conflicts and b. Inter group conflict Intra group conflicts arise between members of a particular group. It is similar to inter personal conflict with the difference that the conflict arises between the people belonging to a common group. Causes of conflict are similar to those of interpersonal conflicts. Inter group conflicts means conflicts between different groups in the organisation. These conflicts may be among different levels of organisation like middle level managers having conflict with top or lower level managers, or may be between different functional departments, like marketing department having conflict with production department. The maximum access to and share in resources, favourable time schedules, different perceptions, values, cultures may cause inter group conflicts. 4. Organisational Level Conflicts: Inter organisational level conflict occurs between organisations which are in some way or the other dependent upon each other. The conflicts between parent company and foreign subsidiaries are more prevalent. Conflicts may also arise among different foreign subsidiaries of an MNC. Factors like differences in cultural, social and other environmental factors, like lack of informational facilities, dominance of parent company, different rules, regulations etc. may result into conflicts between headquarters and subsidiary. Conflicts may also arise between parent

5 company or subsidiary and trade unions, govt agencies of host country, or any other organisations having impact on the organisation. MNCs can have conflict with local govt due to changes in policies or rules or regulations. 5. Causes of Conflicts in MNCs: 1. Communication Gap: communication gap can be a cause of conflict. Due to poor communication, differences may arise between parent country nationals and host country nationals. HCNs may also not provide proper and required information about the local environment. Similarly, if PCNs are unable to inform or explain the required procedures, or expectations of parent company, it may lead to interpersonal conflicts. The language problems or semantic problems in two different nations can cause conflicts. 2. Behavioural aspect of conflict: Difference between expectations and actual behaviour at host country can also lead to role conflict for expatriates. It can also lead to inter personal conflicts between local managers and expatriates. The dominance behaviour of parent company to have control over the subsidiary can also cause conflicts between the two. Different value systems, social and cultural values, customs and behaviours of different nationals can cause conflicts amongst them. Partiality on the part of PCNs with local employees can also cause conflicts. 3. Structural Aspect of conflict: a. the larger the size of organisation, more are the chances of conflict b. more decentralisation of decision making, autonomy to employees can enhance the levels of conflicts within the organisation. c. if roles are not properly defined, it can cause conflict. Duties, responsibilities, accountability should be properly defined and assigned to each employee, regardless of nationality. d. competition for scarce resources like funds, facilities etc. causes conflict among the people and divisions who are sharing them and have to compete for them. e. diversities in policies relating to human resources for PCNs and HCNs will lead to industrial conflicts. 6. Conflict Management There are two approaches for managing industrial or organisational conflicts. a. Preventive measures b. Curative measures

6 In preventive measures, MNC tries to create a situation where dysfunctional aspects of conflicts do not take place. In other cases, if conflicts have occurred, they should be resolved as early as possible to avoid any destruction. Both measures are explained as follows: a. Preventive Measures: to manage organisational conflicts, some of the following preventive measures can be taken by the organisation: 1. Establish common goals: common goals for conflicting groups can be established. Management can find common goals upon which groups can agree and re-establish valid communication between the groups. 2. Reduction in interdependence: the main reason behind inter-group conflict is interdependence among them. Lesser the interdependence, lesser are chances of conflicts. In case of MNCs, subsidiaries should be provided sufficient autonomy to frame policies and take decisions which are in the best interests of the company by keeping in view local environment of host country. The policies of parent country cannot be applicable to other countries due to diverse environment. 3. Cross cultural training of expatriates: the expatriates should be given cross cultural training to better understand the local conditions of host country. This training can be given either before arrival or after arrival to host country. This will help expatriates to better understand local environment and hence, will frame and take decisions as per host country conditions which will help in minimising their conflicts with HCNs. 4. Properly defined roles: roles should be properly defined to all employees including expatriates. The tasks, responsibilities, and authorities of all employees should be properly defined and communicated to all. It will lessen inter personal and inter group conflicts. 5. Trust and communication: more open and free communication will prevail amongst members of an organisation if they trust each other. All individuals and groups should be encouraged to communicate openly with each other, so that misunderstandings, if any, prevailing can be removed. In this way, they are able to understand the problems of each other in a better way. MNCs should ensure proper flow of communication between parent country/headquarters and host country. It should send all messages in language known to locals or arrange for their translation. 6. Impartiality: MNCs should give equal benefits and opportunities for growth to HCNs as given to PCNs. It will reduce chances of conflicts. However, countries following ethnocentric approach will always employ PCNs for higher posts in foreign subsidiaries. It may present resentment in the minds of HCNs. 7. Shared resources: sharing of scarce resources also sometimes result into inter group conflicts. Company should strive to increase resources, or optimum allocation of scarce resources amongst different groups.

7 8. Coordination: MNC should do efforts to establish coordination between the activities of its various units. Within a unit, there should be proper coordination among different activities. 9. Reorganisation of groups: groups can be reorganised with people having something in common placed in one group. In this way they will have common interest and objective, hence reducing conflicts. 10. Participative management: employee participation in management and profit sharing create a sense of belongingness among the employees and prevents industrial conflicts. 11. Collective bargaining: collective bargaining is a process by which employers and the representatives of the employees on the other, attempt to arrive at agreements and helps in settlement of issues and prevention of industrial conflicts and disputes. b. Curative Measures or conflict resolution: Curative measures are taken after the occurrence of conflicts. It is also known as conflict resolution. For resolving conflicts, mangers must know different conflict resolving modes and appropriate use of resolving modes in different situations. Following are some conflict resolution techniques: 1. Avoidance: to suppress and avoid an open conflict is one of the main conflict resolution strategies. In different national cultures, there exist different levels of conflict avoidance. For example, the Japanese are more likely to avoid conflicts than the Americans. An avoiding behavior shows failure to address important issues and a tendency to remain neutral when there is a need to take some action. Hence, avoidance behavior should be adopted in following situations: a. When the avoider want that other party should cool down, and tension can be handled later on more productively. b. When more information is required to make a good decision. c. When a third party can resolve the conflict more effectively. 2. Competing: a competing style is based on assertiveness and lower amount of cooperativeness. It is power oriented and approaches conflict in terms of a WIN-LOSE strategy. It can have both positive aspects as well as negative aspects. As a positive aspect, competing style helps in taking quick decisions while on negative side, competitor can coerce other parties into conflict. In case of MNC, PCNs may dominate HCNs due to powers assigned to them by parent company. 3. Collaboration: in case of collaboration, both parties try to find some solution to solve the conflict which would be satisfying to both parties. This style includes high level of cooperation and assertion. 4. Accommodating: this style is low in assertiveness and high in cooperativeness. Managers adopting accommodating approach to conflict management, will show little

8 concern to their own personal interests. This style is adopted when maintaining harmony is important. 5. Compromising: under compromising mode of conflict management, parties to conflict agree to compromise the situation and agree to share resources or solve the conflict which gives some degree of winning and losing for both parties. This practice is generally followed when both collaboration and competition fail to work effectively in resolving conflicts. Parties also compromise to settle the issue in short run till a more permanent solution to the problem can be found. 6. Investigation: govt. of host country can appoint a board or court to conduct investigation into the conflict. Investigation can be conducted voluntarily on an application by either or both parties to the conflict or compulsory by the govt. 7. Mediation: in this method, an outside party assists the parties to conflict in their negotiations. Main job of mediator is to settle the conflict by bringing a voluntary agreement. 8. Conciliation: the purpose of conciliation and arbitration is to reunite the two conflicting groups in the industry in order to avoid interruption of production, distrust etc. under conciliation, representatives of both employees and employers are brought together before a third party in order to persuade them to arrive at some sort of settlement. It is an extension of collective bargaining with third party assistance. 9. Voluntary arbitration: if the two conflicting parties do not come to an agreement, either by themselves or with the help of a mediator or conciliator, the matter may be submitted before an arbitrator voluntarily, whose decision, the parties will have to accept. 10. Compulsory arbitration or adjudication: in case of weak trade unions, compulsory arbitration is used. Compulsory arbitration is also used when all voluntary methods fail to arrive at a settlement. MNCs adopt different conflict resolution styles for different countries. In a study of comparing styles of Taiwan and US it was found that Taiwanese are more likely to use avoiding and compromising styles as compared to Americans. MNCs can adopt different actions depending upon situations, parties to conflict and organizational resources available. 7. Summary Industrial conflict means any dispute or difference between employers and employees, or within employees, which may be concerned with employment, or terms of employment or with working conditions etc. MNCs employ persons from different countries with different cultural, social, political and religious environments. So conflicts may arise due to different perceptions, values, working

9 practices etc. There are four levels or types of conflicts: individual level, inter-personal, group level and organizational level conflicts. The causes of conflicts in MNCs are communication gaps, diversity in cultural, social and other environmental factors at personal, organizational and national level, lack of resources, lack of cooperation on the part of parent company, lack of autonomy given to subsidiaries, urge to take control over subsidiary, etc. MNCs can manage conflicts by taking preventive measures like eestablishing common goals, reduction in interdependence, cross cultural training of expatriates, properly defined roles, trust and communication, impartiality, shared resources, coordination, reorganisation of groups, participative management and collective bargaining. Conflicts can be resolved by adopting any of the measures like avoidance, competing, collaboration, accommodating, compromising, investigation, mediation, conciliation, arbitration either voluntary or compulsory.