History as Human Conflict
Conflict and competition are rooted deep in the basic nature of animal life, including humans. Shocking a century ago and rejected in his lifetime (for reasons of religious doctrines of creationism ), Darwin's scientific theories of evolution, natural selection, origins of species and "survival of the fittest" are now generally accepted as scientific/act, the true and realistic representation of animal nature.
Competition for Survival in the Animal World
Today dozens of TV research documentaries on the animal kingdom routinely photograph animals in jungles and the wilderness as they really are, often enchantingly playful, beautiful and nurturing of their "own" but always preying upon others with tooth, claw, fang and tongue. They all must kill to eat as a necessity for survival (humans do the same). Fight or/light rules the jungle as "winners" live and "losers" die.
No one any longer shuns this realism of animal conflict and its life-or-death competition. It's just the balance of nature, each of millions of animals (and plants) surviving by eating others in its food chain and within the limits of available resources. As violent as are the realities of jungle life, such are routine TV fare today in Disney movies, documentaries, 'Wildlife" programs on PBS TV and Time-Life books. Although usually avoiding the final grim and bloody moments of a tiger killing a deer or other such animal feeding frenzies, the routine conflict and competition for survival are abundantly clear and accepted by adults and children alike as simply the realities of nature.
Competition for Survival in the Human World
Conflict and competition for survival prevail equally in the world of humans, as deep-rooted, inevitable and natural as in the animal world. Because of man's unique intelligence, conflict is more sophisticated, often hidden or secretive, and is rationalized as economics (strong competitors win the scarce resources of money, markets and jobs) or politics (winners gain power to control others) or war (victors claim an enemy's land, resources and women), and so on in all aspects of human life throughout history. Few American workers any longer need to hunt and kill animals (although many enjoy it as a sport and worship the National Rifle Association). Instead, most of us eat meat in restaurants or frozen food packages (euphemistically dubbed "Salisbury Steak" or "Filet Mignon"), spared the efficient slaughter of other animals by humans whose job is to do the animal killing for us, sight unseen. But the reality is that we humans kill and eat everything we can, as do all animals.
In short, the history of animals and humans reveals conflict and competition as basic and natural. And so it is in modern organizations; usually more subtle - but just as deadly.
The issue for practical managers is not to reject conflict as "bad" or unnatural (since conflict is clearly the essence of Mother Nature's world) but to find creative ways of channeling it constructively -or to replace it with well-managed team-building where all participants win and conflict is limited or unnecessary.
Good (and Bad) Competition
American capitalism thrives on intense competition. High-incentive, profit-driven and efficient companies win markets (and profits) while lazy competitors lag and fail. Competition rewards the industrious, weeds out and eliminates the lazy or incompetent and creates a vibrant national economy driven by optimum motivation to work hard and efficiently. This results in optimum productivity, goods and services, and an American standard of living which has become the envy of the world.
Specific Causes of Internal Conflict
The fundamental cause of animal and human conflict has already been explained above: natural competition for survival. Specifically, especially in modern organizations, the following are the main specific causes, operating daily in most workplaces.
"Differentiation" versus "Integration"
Differentiation is a recent term in organizational studies and refers to the radical differences among people, departments and technologies in modern organizations.
Throughout history, differences among people have long been recognized as a prime cause of conflict and wars, especially differences in religion, culture, homelands, ethnic and national origins, and language. Even today, Iran (Persia) is forever in conflict with its Arab neighbors who, although Moslem like Iranians, identify themselves by their own Arabic language. The new Israeli nation differs from all its neighbors in both religion and language as well as its democratic (Western-like) form of government. The near-hopeless instability in the Mid-East is fueled by thousands of years of conflict rooted in such basic differences among its peoples.
Differentiation, on a huge scale, characterizes the U.S.S.R, formed by force from hundreds of different ethnic groups, cultures, languages and once independent nations. Only about half of the population of the U.S.S.R. even speaks Russian. These highly differentiated peoples have been held together by a major "integrating" device, as old as the Roman Empire: central control by totalitarian rule and military force. Even this intimidating U.S.S.R. central control is now collapsing as democratic forces for self-determination tear the U.S.S.R. apart, separatism prevailing in the Baltic republics, Russia, the Ukraine and throughout the Soviet empire.
Conflict in the U.S., with its religious freedom, has been historically confined mainly to differences in European origins, the regional states of the Union and the racial conflict which caused the Civil War and still rages throughout America. Since the U.S., by its Constitution, shuns the historic forms of totalitarian integration, as used in Communist U.S.S.R. and China, America's increasing racial and ethnic differentiation is a national problem soaring into uncontrollable dimensions. Demographic trends indicate that by 2050 less than half of Americans will be white Caucasians, the other half blacks, Hispanics, Asians and other minorities. This escalating differentiation frightens political scientists who know that American government has no systematic means of resolving the inherent and growing racial conflict.
The above are global examples of the destructive results of differentiation and the reason many societies, especially Japan attempt to remain homogeneous. But let's return to our main focus which is differentiation within organizations, corporate and government.
There are in general three types:
Vertical Differentiation: The differences between the viewpoints and concerns among top managers, middle managers and first line supervisors (and workers) at the operating level. Top managers and CEOs are "big picture" thinkers, impatient with immediate operating details, more future-oriented in their formulation of corporate goals, plans and major policies. First line supervisors are overwhelmed with the pressures of this here-and-now day with its hectic phone calls, instant deadlines to meet customer and employee demands, and a daily deluge of immediate problems both technical and human. Middle managers are either line managers (with command authority) or staff (advising and providing information); in either case, they are buffers between top management and the operating level, inundated with paper work and the unending documentation routines of any bureaucracy. Effective communication especially is difficult through these vertical channels, each party involved with totally different viewpoints and concerns.
Horizontal (Functional) Differentiation: The differences between the thinking and work habits of the various functional departments of an organization such as Manufacturing vs. Marketing vs. Accounting vs. R&D vs. Sales vs. Personnel vs. Legal, Taxes etc. Each member of each functional group "sees" and perceives the organization mainly from his own special point of view, as instanced in the three cases above. In one, for example, a Credit manager is concerned solely with his "bad debt" ratio (timely payments by customers) and has no interest in sales or service.
Differences between departments and their members are fundamental in their differing ways of thinking about styles of work and life, time, goals, deadlines, customers and hundreds of essential company operations. Accurate time-sheets from employees obsess people in Accounts Receivable as they bill customers (especially Government) for particular itemized projects but an irritation, often ignored, to R&D engineers interested only in their product designs and testing of products. Hourly factory workers ignore safety bulletins and escalating health care costs which agonize the Personnel Benefits Administrator. And so on.
Differentiation by Professions: the lifelong differences among organizational members in their education, skills training, background and professional lifestyle. Computer programmers thrive on quiet concentration on intricate codes that produce powerful software while the accountants using them distract the programmers with demands for time-sheets. Doctors lose their careers by putative malpractice for ignorance of late changes in the law, belatedly explained (but only vaguely understood) by a lawyer in that doctor's specialty. A small business owner goes bankrupt for ignorance of new tax or other government levies which destroy his gross margin. Salesmen can't understand the factory's need for a week's production time to deliver a product to a valued customer while the factory managers resent the pressure such sales impose upon their systematic operations. Modern society is a maze of immensely technical specialists and few of these specialized people can understand or talk to each other.
The Soaring Rate of Organizational Differentiation
Although differentiation has been a universal cause of political and religious conflict (as noted briefly above) business and government organizations were relatively simple and undifferentiated until this present century. A shoemaker made shoes or builders made houses or farmers farmed by the same methods learned from their fathers and grandfathers. There was little change or innovation in task technologies through generations and even centuries. A doctor was never a specialist but handled all ills in unchanging traditional ways. The laws of the land remained the same for centuries. Most people, even the great German philosopher Immanuel Kant, lived and died within a mile of their birth place.
Starting with the scientific revolutions about two centuries ago in physics, chemistry, medicine, computers, and all fields of human activity, and new political arrangements (democracy), task technologies in every field began to change drastically - often almost daily in today's world. No doctor today attempts treatment unless it is within his minute specialty. Most lawyers specialize in some minute part of the law such as product liability and are hard pressed to keep up with the daily changes even in that sub-specialty. Computer software packages, Word Processing and Spreadsheet devices used daily by millions become updated in new Versions (V2.1, V3, V5.1, etc.) almost annually. And so with automobiles, home appliances, insurance, financial products and the specialists who alone create, understand and service them. Given these and millions of similar rapid changes in every technology today, differentiation is increasing exponentially in every field of human activity. Specialists in different fields can rarely even understand each other much less cooperate toward larger organizational objectives. Communication becomes formidable, if not impossible.
Thus internal organizational conflict thrives in these soaring degrees of differentiation in modern organizations.
Although beyond our scope here, thoughtful people must worry about differentiation on a global scale in macroscopic national economies, trade patterns, population explosions, terrorist capabilities, chemical pollution of the Earth, racial strife, proliferation of nuclear bombs and other mass-destruction technologies. The conflict fueled by modern man's differentiation, if uncontrolled, can literally, like a Frankenstein monster, destroy the very species which created it.
Conflict and Competition (Good and Bad)
Human conflict and competition are complex concepts and not the same; and either can be bad or good. To be precise, conflict is essentially discord or strife based on differentiation (differences in viewpoints, attitudes, beliefs or basic nature). Thus feuding families (as in Shakespeare's Romeo and Juliet or the Hatfields and the McCoy's) might hate each other for mere differences in religion, race, ethnic background or even physical appearance. Such conflict spawns needless killings and is bad.
Thus we must distinguish between the two essential parts of conflict: differentiation and strife, each sometimes bad and sometimes good. In the case of the feuding families, human differences led to destructive strife. But human differences can also create and integrate into high harmony (as in the life-long marriage of a male and a female or the friendship of a child and its grandfather). So also can conflict itself be destructive or constructive depending on conditions discussed later (the kinds and degrees of conflict).
Competition is only one form of conflict in which different people strive for the same goal (an Olympic gold medal or a prized job, promotion or major customer or winning a budget battle for scarce funds). Competitive conflict can energize an individual or organization or nation (capitalism vs. socialism as noted above) or destroy it as simulated in the Blue-Green game.
The Traditional View of Conflict in Organizations
The very tone of the word "conflict" signifies something bad. Organizational theorists (until recently) always regarded any kind or degree of conflict as a sure sign that something was wrong, that administrative control of operations was failing. Conflict was regarded as threatening, noisy, unsettling, an interruption of efficient routines, disruptive to the smooth and predictable processes of the organization. Time-proven methods and standard operating procedures were demanded and unchallenged. The classical models of organizational design and administrative science (Fayol, Taylor, Weber, etc. ) stressed permanent line structures with clear chains of command authority, every individual knowing exactly what to do each hour and doing it routinely -with no resistance, delay or questions asked. Job classifications and position descriptions stereotyped every function and determined everyone's pay. Any deviation from set standards was conflict - and bad, and quickly suppressed.
As the history of organizations shows in the rise of labor discontent and unions, the conflict was suppressed, not avoided. The true feelings and ideas of workers surfaced as hostility, poor work attitudes, slowdowns, absenteeism and strikes. Constructive and creative disagreement (conflict), in the form of employee participation and suggestions, was suppressed within the organizational system, but became external and hostile attacks upon it.
The New View of Conflict in Organizations
Today psychologists and organization theorists reject the instant fear of conflict as per se bad and view it more objectively as neither bad nor good in itself. Conflict becomes good or bad depending on its kinds and degrees. With the current scientific acceptance of Darwin's theory of animal evolution, and conflict, constant change and adaptation at the heart of it (see above), conflict is viewed as a basic reality of elemental Nature, often harsh but both constructive and destructive. Healthy lions run down slow and weak deer for food and thereby prevent inferior strains of deer from reproducing; in turn, slow and inferior lions fail to secure food and die before they reproduce. And so it is with the millions of animals and species driven by Nature over millions of years as Nature gradually sorts out and favors the good from the bad, the strong from the weak, the successful from the failures.
Similarly with humans throughout their history, different kinds of conflict have often led to creative changes for the good (America's revolution against England creating today's free and prosperous U.S..) as well as failed human experiments (the Communist U.S.S.R., now collapsing as an inferior political and economic arrangement - or the conflicts in America's slavery system, still unresolved and possibly the fatal flaw in America's future).
In today's business organizations, conflict and competition can take the healthy form of open communication and disagreement throughout all vertical and horizontal channels emerging in new creative ideas and methods (demolishing the old and obsolete, often painfully), thus Degrees of Conflict "W1 remaining competitive in our free markets, as the Japanese do consistently. But internal conflict can trigger self-destruction of the organization as demonstrated in the dynamics of the Blue-Green game.
Also critical are the degrees of disagreement and conflict. The diagram suggests the general relationship between organizational task effectiveness and the degrees of internal disagreement and conflict, ranging from too little of it (the lifeless, non-innovative, non-adaptive organizations of traditional organization theory) to too much of it (dissipating the organization's energies in zero-sum conflicts as in the Blue-Green simulation). Later sections of this book will explain more specifically how managers can distinguish good vs. bad conflict (and competition) and, most importantly, how to control and manage it. This indeed is the major purpose of the book. But one must first understand fully the nature and dynamics of conflict, as presented above, before attempting to control and manage it effectively.
The Nine Basic Methods of Handling Conflict
There are typically nine ways managers try to control conflict and disagreement, some better than others and all dependent upon the situation. In the use of the nine methods, one must bear in mind always the now generally accepted "Contingency Theory of Leadership," that no leadership method is absolute or universally "best" but instead contingent upon the particular here-and-now situation. Thus an autocratic style might work in an emergency situation where a participative style would be best with a group of engineers designing a new product.
(1) Person in Authority Simply Forces His View:
employee disagreement or suggestions are suppressed, all do exactly what they are told, no questions asked; a clearly autocratic leadership style patterned upon traditional organization theories.
(2) Ignore, Deny or Withdraw from the Conflict: all pretend that no conflict exists. Again it is just suppressed. Like Russians under Socialism, workers pretending they are working and the government pretending it is paying them money (useless rubles with little merchandise produced or available to buy).
(3) Hide the Conflict in the Bureaucracy: Similar to (2) above, but involves adroit "bucking" of issues to committees and subcommittees for unending "feasibility" studies. Result is that the issue is never confronted or solved, only ignored.
(4) Diplomacy, Persuasion, Kindness: Essentially the "diplomatic" leadership style. The leader, like the autocrat, insists on his orders but explains his reasons and/or offers incentives for compliance such as a bonus or perk.
(5) "Win-Lose" Tactics ("Open Warfare"): If all else fails, leader "declares war" against employees; they obey or are punished or fired. This becomes the "Blue-Green" (or Green-Green") pattern in the Blue-Green simulation above.
(6) Establish a Grievance Committee or Arbitration Agent: If all else fails, the leader "cops out" and shifts the conflict to a "third party" (top manager, committee, external board such as a government agency) to discuss and/or resolve the conflict [or bury it as in (3) above].
(7) Compromise, Bargaining, Negotiation: Resolve the conflict by everyone "giving in" a bit, arriving at a "deal" by which all gain (and also lose) equally. Typical of U.S. Congress. Often a compromise is useless and worse than doing nothing (proponents and opponents of a highway from Washington D.C. to Baltimore compromise and build just half of it, stopping midway at Laurel, Md.).
(8) Majority Vote ("Democracy"): Like (7) initially except negotiations fail and a majority decides it. Again typical of the U.S. Congress. The flaw is that the majority is often wrong (the geocentric view of the universe was believed for centuries and the U.S. Congress passed the prohibition laws later repealed). Majority vote, with universal suffrage (many voters utterly uninformed or ignorant of the merits of issues), is a potential fatal flaw in America's current form of democracy.
(9) Consensus Through Objective Communication: All participants accept a group norm of deciding an issue based solely on facts generated by full and open discussion with mutual respect and the objective merits of the evidence. The group norm demands, by peer pressure rather than raw authority, that all discussion be rational (not emotional), factual (not mere opinions), focused upon a clear organization goal (not parochial interests); and that any conflict be openly surfaced, accepted as honest disagreements and resolved by the increasing weight of factual evidence developed by the exchange of information. This, if the organization climate is open, honest and genuinely participative, is generally the ideal method for resolving conflict.
"WA" in Japan - Litigation in America
As competitive as are the Japanese with outsiders (often viewed simply as the "enemy"), the cultural norm for Japanese dealing with each other (within their "own" group) is "WA," loosely translated as harmony, cooperation, mutual respect and help. Each individual gains most of his sense of personal value insofar as he contributes to his "family" or company group. A selfish schemer, striving only for his own individual benefit, is abhorred and "loses face," disgraced among his peers. Method # 9 (above) is the natural and easy one for conflict resolution among the Japanese. They slowly and carefully develop internal consensus and from the strength of that unity compete against outsiders with unparalleled economic success throughout all international markets. In Japan, businesses and government and labor don't fight each other, but cooperate hand-in-hand (antitrust laws very loose) to coordinate and strengthen each other, target outside markets and win them easily. (Other factors also contribute to the economic success of "Japan Inc.," such as a strong work ethic, inclination to save rather than consume and to talk rather than fight among themselves.)
Americans, by contrast, are by their cultural history rugged individualists and fighters, not only with outsiders but especially among themselves. They thrive on it and even seem to enjoy it. The American mindset was conditioned by a harsh history of pioneers who carved out primitive settlements as they moved West, with death, disease and killings routine, exterminating most of the Indian natives, surviving by guns leveled against their own potentially dangerous neighbors coveting land or water. Later, political and economic warfare dominated America with strict antitrust laws to thwart ravenous "robber barons" exploiting their own people, and by constant and open hostility of government and labor against businesses - and vice versa. Thus Americans are inherently adversarial ("WA") even in their daily relations with each other - they are "natural born" fighters.
Method # 5 (above) for conflict resolution is the typical American preference with some use of the other Methods (except #9, rarely successful in American transactions, whether in business or domestic relations). The natural mode for Americans confronting conflict is to fight, armed still with guns but increasingly with lawyers.
America today is the supreme litigious society of the world. There are more than 500,000 lawyers in America (compared with only 17,000 in Japan). Allowing for differences in populations and on a per capita basis, America has about 25 times as many lawyers as does Japan. Also, most legal work in Japan is routine contract paperwork whereas America's is stridently adversarial, corporations and individuals suing each other with the usual "Green-Green" mutual destruction (the second conflict strategy below). Since nothing is added to America's real production (net GNP) by this legal in-fighting, the huge costs of lawyers are merely needless overhead, ruining the nation's real competitiveness in international markets as is obvious today with America's soaring budget and trade deficits. (Japanese CEOs often quip to American counterparts that we Japanese produce engineers who make useful products while you Americans produce lawyers who make useless paperwork - and huge fees!).
Three Basic Strategies of Conflict
Common to animals in Nature and humans in organizations, there are three fundamental ways in which conflict occurs or is avoided. Although operating mainly subconsciously, they constitute for animals or humans confronting the ever-present potential of conflict its three basic strategies:
• "Win-Lose" (Open Warfare - One wins, the other loses.)
• "Lose-Lose" (Open Warfare - Both destroy each other - and lose.)
• "Win-Win" (Teamwork - Both cooperate and win.)
In the first strategy, one aims to defeat or destroy another and win, forcing the other to lose (for example, a tiger killing a deer or a stock broker successfully cheating a customer).
In the second strategy, both contestants attempt the first strategy against each other but neither is able to win, and both continue the conflict until both lose (two male animals kill each other fighting over rights to a female or two executives scheme for a promotion and badmouth each other till both aggravate top management and both lose the promotion).
In the third strategy, all find ways to cooperate, help each other toward a mutually valued goal and create teamwork so that they all win together, none able to do it alone (wolves ganging up on elusive prey and sharing the food together or salesmen sharing a commission on a home sale neither could have achieved alone).
The Group Dynamics of "Win-Lose" and "Lose-Lose"
These first two strategies were demonstrated in the Blue-Green game. Distinguishing between the task level in any group (the complexity and difficulty of the job to be done) and the human process level (how the members interact with each other as humans), the human process driving these first two strategies is loaded with mutual hostility, competition, mistrust, self-centered tunnel-vision and even deceit and lying. In the Blue-Green game, it is typical for members of different teams to mistrust each other to the point of even lying to each other about their plans and intentions in order to gain an advantage and score points against other departments of the ABC Company. This deceit is reciprocated in a domino-type effect, resulting quickly in the Green-Green (Lose-Lose) pattern by all departments throughout the organization. Soon all departments aim only at winning points for their own departments, ignoring totally the interests of their ABC Company as a whole. Although the task level in the Blue-Green simulation is utterly simple and easily achievable, the ABC Company and its departments fail and "go bankrupt," due entirely to problems and conflict at the human process level (not task problems at all).
The same basic pattern of conflict is also illustrated in the cases above involving a company's sales managers in conflict and competing against each other and against their own credit manager. The typical scenario is that each "cancels out" the others' efforts resulting in a zero sum bottom line profit (or net loss) for the organization as a whole.
Task Level Versus Human Process Level (Again)
In short, we must emphasize again that the problems and failure of the organization are not a matter of the task level (the task easily achievable by the technical talents within the group) but instead a self-destructive collapse of the organization at the human process (group dynamics) level. Because of the breakdown in human process and the collapse of human trust, cooperation and teamwork, the task-level technical talent within the group becomes wasted, each canceling out another in a massive and self-destructive zero sum organizational game.
Many management consultants (including myself) regard these deeply-ingrained patterns of internal conflict as the major problem confronting modern organizations, especially as they grow huge - and quickly - in size and complexity. Today's very common matrix type of organization structure (a multiple chain of command in which people really have two or many more "bosses") radically exacerbates organizational complexity and the problems of internal conflict. Differentiation levels soar to proportions almost out of control in huge and complex organizations. Only strong and intelligent management can control this new and escalating phenomenon of internal conflict within organizations.
The Three Elements of Human Teamwork
Life-or-death conflict is buried so deep in animal and human nature, as an essential element for survival, that no quick or easy management techniques can erase or control it. Only the naive could expect any sure or simple solution to this deeply rooted problem of internal conflict. It is as fundamental in animal and human nature as the urges for air, water, shelter, sex and food - even killing others to fulfill these elemental needs.
However, research in the fields of Group Dynamics (Psychology) and Organizational Theory (practical Management) has discovered three elements essential - sometimes almost miraculous - in creating human cooperation and teamwork in organizations. Management consultants (including this author) have been using the three elements for many years with always significant and often spectacular success in reducing internal organizational conflict and replacing it with constructive teamwork. These three elements that create teamwork are seemingly simple and familiar terms but most difficult to use properly - and most managers don't or can't. They are:
Let's examine each of these three key elements of teamwork in detail:
Clear Goals (Management by Objectives)
Few functions are as basic to a manager as setting clear goals for his organization and them accomplishing them. It is part of the very definition or essence of a manager (one who gets goals accomplished through other people). And yet, MBO (management by objectives) recently became a huge movement throughout major companies, soliciting high-priced consultants to install management systems focusing everyone on clear goals. As a supreme irony, managers accept goals achievement as their main mission but, in actual practice, permit goals at every level of the organization to be vague, unclear or in actual conflict with each other. In many cases, companies acquire other companies, as seeming here-and-now "opportunities," with little clearness about what business they are (or should) really be in. Many workers at the operational level are left unclear about exactly what their goals or priorities are on any given day (often called "management by crisis").
Unclear Goals a Major Source of Organizational Conflict
When people in an organization are unclear or have any doubts about what the organization's goals are, they instinctively tend to substitute their own departmental or personal goals to fill the vacuum. In the Blue-Green game, participants in the four teams (departments of the ABC Company) are not completely certain that the objective is to accumulate maximum points for the ABC Company as a whole and so they tend always to maximize their own team's points at the expense of others. The zero-sum result for the ABC Company is bankruptcy, one department's losses canceling out another's gains.
In the case of the credit manager, top management has wrongly defined his goal as a "minimum bad debt ratio." So he rejects profitable sales for the company from all late-pay customers. In the case of the sales managers, top management seems to offer promotion to the one with the most sales in his own department, apart from any supportive cooperation and sharing of sales promotion methods with other sales departments.
In all these cases, the roots of the conflict are top management's failure to make clear the company's goals and reward only departmental efforts that contribute to those goals. The credit manager's goals must be clarified to accept sales that are profitable to the company as a whole, rejecting only unprofitable sales. Top management should make it clear to the competing sales managers that a promotion depends not only on sales volume in their own departments but also on many other essential criteria (sharing of sales promotion ideas with all departments, cooperation and teamwork aimed at maximum sales for all the company's departments, not just one's own, etc.).
Clarifying Goals by MBO (Management by Objectives)
MBO is the powerful method for concentrating the efforts of everyone in an organization on its real goals, made clear through a systematic hierarchy of goals increasingly specific as they reach the lower levels of actual operations. This author's MBO system, installed in many organizations, involves essentially five stages:
1. Top Management sets, prioritizes and communicates clear goals;
2. Then delegates goals to proper departments to implement.
3. Each department head assigns specific parts of the goals (and the detailed means to achieve them) to individuals in a "performance commitment," clearly stated jobs agreed to be done by a specific deadline. (This is not the same thing as a Position Description whose main purpose is personnel administration, not specific job results.)
4. All performance commitments in all units are coordinated into plans to assure that all parts "fit" and achieve top-management goals as set. A valuable management tool for such planning is a standard project management system such as Gantt charting, PERT (Program Evaluation Review Techniques) or similar computer software such as TimeLine (which includes Gantt charting and PERT).
MBO is a powerful system, capable of quantum leap improvements in performance, sometimes even "minor miracles." But it is fragile and easily abused unless management has built and cultivated a healthy human environment throughout the organization with high degrees of mutual support, trust, ethical integrity and especially open and honest communication. Without these human qualities, MBO inevitably becomes mere manipulation of the "mechanics" and bureaucratic paper trails of MBO, a cynical farce, everyone "faking" their plans, budgets, timesheets and results. In any such dishonest organization climate, MBO becomes Machiavellian hypocrisy and a ruinous waste of time.
An Effective Communication Climate
In the Blue-Green game, teams that choose not to communicate when the opportunity for it is allowed inevitably end up in conflict and green-green or zero-sum exchanges. Communication emerges as the critical nerve-system link essential to even the tiniest beginnings of any kind of cooperation and teamwork. The same is true in real organizations, especially large and complex ones. It is typical in huge organizations for people in one department such as manufacturing to be utter strangers to people in another such as R & D. They know each other only as names on cold, crisp forms circulating from one department to another, tasking or making irritating demands on each other with stress-filled deadlines. Not even knowing each other as persons or understanding the other person's goals and needs, an organization becomes an atmosphere of "us versus them" tense distance and even hostility; and much such mutually needed help is ignored or subverted. The organization as a whole suffers needless inefficiencies and major failures in product quality, on-time delivery and profitability.
For example, a manufacturing manager's request for a slight and easy readjustment in an R & D design to solve a major and high-cost manufacturing problem with available machinery is resented in the R & D department and quickly ignored or overruled. Such destructive zero-sum conflict could be avoided if all concerned met and communicated often one-on-one, face-to-face, in inter-departmental problem-solving meetings and especially informally at lunch, ad hoc phone calls, etc. If they come to know each other's problems and needs, mutually supported each other in an honest effort for reasonable consensus, high degrees of cooperation and teamwork become comfortable, routine and mutually satisfying.
Thus an essential of organizational teamwork is effective communication based upon mutual trust and honest effort for consensus. Without quality communication, alive and thriving, an organization is doomed to unending and unresolved conflict. Lacking this critical human link, genuine teamwork is impossible.
Multi-dimension Reward Systems
Most compensation systems in organizations are still archaic one-dimension pay routines, set up mainly for administrative simplicity in personnel and accounting offices. Workers are paid solely by the hour or by a monthly salary or by a percentage commission on sales made. One-dimension compensation systems reward only individual effort, not any teamwork effort, and thus encourage Blue-Green game kinds of conflict. For example, let's return to the salesman, collecting his commission on a sale promising unreasonable early delivery damaging to his factory's cost controls and the firm's profitability on that sale.
Although his sale results in a loss for the company, due to the extra costs, he is still rewarded with his commission. There is a thoughtless mismatch between management's real goal (profitability) and what its system is rewarding. A policy change, reflecting an exact match up between goals and rewards, would pay the salesman his commission only when a sale contains reasonable delivery conditions and is profitable for the company as a whole.
Such mismatches of management's real goals versus actual rewards to individuals are the root of most internal conflict and are easily corrected by carefully designed multi/dimension compensation systems rewarding both individual contribution and contribution to teamwork.
Typical examples today are profit-sharing programs, bonuses for group results, special awards for conspicuous teamwork efforts, etc. The key to reward systems is to correctly match every reward to ultimate top management goals. This is rarely done in traditional one-dimension reward systems.
"OD" (Organizational Development)
Now, finally, we can define what is meant by "OD," an increasingly popular management system being installed into organizations by management consultants nationwide (many, such as myself, based in university B-schools).
OD originated as a spin-off from the early applications of Group Dynamics and "Sensitivity Training" to practical organizations and their key executives (stressing the human "Process" level as in above). Distinguishing carefully between an organization's Task Level (its practical goals) and the human attitudes and effort to achieve the goals (Process Level), OD attempts to optimize human Process as the most practical means to optimize Task achievement.
OD is now defined as "the building of group (interpersonal) effectiveness (in terms of constructive human relationships and harmonious "working together"), not for its own sake, but as a practical and necessary MEANS toward improved task results throughout the organization." The actual implementation and details of a successful OD effort consist of the three elements of teambuilding as described above. OD and teambuilding are essentially the same, and equally difficult but supremely rewarding.