Companies spend a lot of time and money trying to reduce conflict in the workplace, but constructive conflict can lead to improved decision-making and innovation. The trick is to create an environment that encourages the expression of dissenting opinions while preventing disagreements from getting out of hand.

The Building Blocks of Constructive Conflict

Conflict, when managed constructively, plays an important role in the development of healthy work relationships. But to direct conflict, financial managers need to understand what contributes to constructive conflict. According to the book “Interpersonal Conflict” by William W. Wilmot and Joyce L. Hocker (McGraw-Hill Cos. Inc., 1998), the six building blocks of constructive conflict are:

  • People change. In constructive conflict, people try new strategies, communicate differently and change their goals when necessary. They are willing to try something different.
  • People interact with an intent to learn instead of an intent to protect. Constructive conflict is viewed as a learning experience, albeit a difficult one, instead of something to protect yourself against.
  • When the conflict is constructive, people do not stay stuck in conflict. Instead, the conflict serves to bond parties together, define the group, clarify feelings about issues and processes and bring up the possibility of needed change.
  • Constructive conflict enhances self-esteem in the participants. Each person feels more productive, has a more accurate picture of oneself and the other person involved, feels more self-worth (“We made it!”) and feels more connected to the other person.
  • Constructive conflicts are characterized by a relationship focus instead of a purely individualistic focus. When we acknowledge the importance of the relationship, it allows us to move to constructive conflict.
  • Constructive conflict is primarily cooperative.

Conflict is a fact of everyday life for financial managers. Disagreements within the finance department and with other departments over everything from salaries to budgets are a workplace staple. But instead of avoiding conflict, financial executives should do all they can to encourage it, because from the roots of conflict grow the fruits of innovation. As Ken Matthews, CFO of Chatham Steel Corp. in Savannah, Ga. explains, “Although conflict doesn't feel very good, if it is handled appropriately, it leads to better understanding and more thorough decision-making.”

This isn't as lofty or far-fetched an idea as it may sound. Conflict is a natural part of the human existence, especially in the workplace, and especially these days.

According to Alice Pescuric, vice president and practice leader at Development Dimensions International in Pittsburgh, research shows that managers now list managing conflict as number seven on their top-10 list of priorities. “It used to be much farther down the list,” she explains. There are many reasons for this. First, in today's highly competitive global marketplace all employees are feeling pressure to do more with less, and they're cracking under the strain. “Better-faster-cheaper” may be a good goal for companies, but it creates stress for the people who run them. This stress causes intolerance, which left unchecked, inevitably leads to conflict. But stress is only part of the reason conflict is escalating. The decentralization of management means more employees are being asked to make the kind of hard decisions they've never had to make before. Instead of only executives dealing with the tough stuff, empowerment programs are giving all employees the responsibility to deal with vexing issues — and this causes conflict. In fact, nothing has contributed more to the escalation of conflict than the advent of collaborative, team-based work styles. Companies create teams because they believe many people working together can't help but create better results than any one person working alone. While this is usually true, the convergence of all those different personalities is creating more friction than before. Add to all this the inherent conflict in the business environment itself — i.e., quality vs. quantity, short-term results vs. long-range planning — and you begin to see how all employees are living in a pressure-cooker environment where conflict simmers pretty much all of the time. Instead of putting a lid on it, however, financial executives should seek ways for their colleagues and employees to air their differences constructively. As Pescuric says, “Conflict is healthy, even though it does raise angst and anxiety.”

The Upside of Conflict

By now, you're probably thinking about all the conflicts you've been involved in and wondering how on earth they could be perceived as “healthy.” When you allow conflict, you're allowing others to be themselves. “Employees are smart enough to know what their managers and co-workers want, and in most cases what they want is conformity and obedience,” explains Dr. David Stiebel, author of “When Talking Makes Things Worse! Resolving Problems When Communication Fails” (Whitehall & Nolton, 1997). Thinking conflict is a no-no, employees will refuse to voice objections, share dissenting opinions or even suggest new ways of doing things. In this kind of “group-think” environment, employees can agree their way into horrendous decisions. But when people are allowed to express their opinions, no matter how disagreeable they may seem, magic can occur. More ideas are put on the table, which can lead to more discovery, which can lead to quantum leaps in improvement and innovation. Conflict is a potent source of creativity — especially in troubled times. After all, if everything is going smoothly, there is no need to innovate or move to a higher level. When finance and marketing violently disagree about something, you've got a wonderful opportunity to figure out how to make improvements by meeting both groups' objectives, explains Annette Simmons, author of “Territorial Games: Understanding and Ending Turf Wars at Work” (Amacom Books, 1997). So why then, with all this creative potential, is conflict still viewed as something to be squelched, eliminated or ignored? Two reasons: One, because it feels uncomfortable, and two, because most of us are not at all prepared to deal with conflict. We haven't been taught the difference between constructive conflict that leads to innovation and destructive conflict that damages relationships. Without this kind of framework, it's easy to believe all conflict is bad.

Constructive vs. Destructive Conflict

It's tricky to create an environment where conflict is nurtured but not allowed to get out of hand. The secret is to nurture the kind of constructive conflict that leads to better decisions and discourage destructive conflict.

How do you distinguish between the two? “Look at how employees are relating to one another in public settings,” suggests James R. Lucas, president of Luman Consultants in Shawnee Mission, Kan. “It's usually the opposite of what is going on under the surface.” For example, if you have 10 people in a meeting and they appear unwilling to disagree with one another, you probably have the seeds of destructive conflict at work. Think about it: How many times have you been in a meeting where people nodded politely at the suggestion of new initiatives but went right back to doing things the same old way? This behavior indicates the kind of culture where any conflict or disagreement is considered taboo; the kind of culture that is ripe for destructive, covert conflict. But if people are willing to publicly disagree and challenge one another, you have the makings of constructive conflict. This is because when people are allowed to speak their minds, resentments don't have a chance to fester. Furthermore, these disagreements can ultimately lead to more well-rounded decisions. “There is no one best way to do anything,” Lucas says, and companies that realize this allow employees to make suggestions no matter how contrary to popular opinion they may be.

Here are six ways to create the kind of culture where constructive conflict is encouraged.

  1. Get comfortable with conflict yourself. Experiment with conflict and stretch your comfort zone. Look for unsolvable conflicts and investigate them for the opportunities they may offer for creativity.
  2. Respect individuals and individual differences. At first, it may be difficult to listen and give credit to people who have different perspectives. “It's like learning to use your left hand if you are right-handed,” Matthews explains. But the more open you are to other opinions, the more likely you are to resolve conflict quickly. How do you learn to respect individual differences? By asking questions to clarify the other person's point of view. Instead of disagreeing with your boss or peers, ask why they feel a certain way. This allows you to better understand another's point of view, which can lead to more agreement on your part, or it uncovers deficiencies in their knowledge, which then can provide an opportunity for education.

  • Model the appropriate behavior. Healthy conflict, like any other behavior you want to encourage, must be modeled to become a reality. According to Stiebel, there are several things finance professionals can do to model the value of conflict:

    • Demonstrate your willingness to learn from others and experiment with counterintuitive approaches;
    • Publicly praise employees who suggest new and different approaches;
    • Celebrate the success of counterintuitive decisions by telling stories about them;
    • Show you are comfortable with conflict: i.e., ask for dissenting opinions.

  • Reward the behavior you want to encourage. As any good manager knows, what gets rewarded gets reinforced. If you expect employees to resolve difficult problems and take the initiative to find better ways to do things, you must spell out those expectations in performance reviews.
  • Make sure employees are equipped to do the jobs they are assigned. One of the primary sources of conflict in organizations today is the fact that many employees are working outside of their comfort zones. This leads to frustration, which then leads to conflict. Because of this, one of the best services finance managers can provide is to make sure employees have the support and training needed to do their jobs well.
  • Set up systems wherein conflict becomes a natural part of group discussion. For example, in group meetings, assign someone the task of playing devil's advocate to encourage dissenting viewpoints. Or, at the end of a meeting, ask everybody to write down and share what went well about the meeting and what could be better. “This makes it legitimate to talk about what's not so hot,” Matthews says. Encouraging the kind of ripe and juicy conflict that leads to innovation is a tricky proposition. It's definitely more of an art form than a formula. But when conflict is harnessed, amazing things can happen in an organization.
  • Perhaps Jerry Hirshberg of Nissan Design International put it best in his book, “The Creative Priority: Driving Innovative Business in the Real World” (Harper Business, 1998), when he wrote, “Friction between individuals and groups is typically thought of as something harmful. And it usually is. It generates heat and discomfort, disrupts interactions, and can destroy relationships. Between a couple it can lead to divorce. Between countries it can lead to war. Within corporations, it can distort and disrupt communication and ruin cohesiveness. Businesses of all types spend considerable time and money trying to reduce or eliminate it. But in human terms, it is surely one of the most plentiful and volatile sources of energy on the planet.” So use it — just be careful.