Conflict Resolution and Business Ethics

Photograph by Mike Smail

Conflict resolution is an ethical issue because how we treat one another, including how we treat others with whom we are in conflict, involve ethical considerations. In business, conflicts and the ethical and management challenges they present can arise in a number of areas:

Between two or more organizations: Between a business and its suppliers – who absorbs the extra cost when a shipment is delayed because of an unexpected storm?
Between a business and its sub-contractors – what to do when the terms under which contracts were written no longer apply?
Between business competitors – how to resolve intellectual property disputes?

Within an organization: Between employees and management – over wages, benefits, working conditions, and everything else.
Between different divisions of an organization – what should be done when the “creatives” disagree with the “suits” or when the sales team is frustrated with the software engineers?
Between two or more employees. (See my earlier post on microwave ovens as a major cause of inter-employee strife!)

Between a business and its customers: What counts as a “fair” policy in the case of unsatisfactory products? Does caveat emptor apply across the board?

Between a business and the community: What is adequate compensation for environmental damage? (Remember the BP oil spill?)
How much should a profitable company give back to the community?

For many of these issues, the initial response might be, “Call in the lawyers. Find the extent of our legal liabilities or entitlements.” Or: “Look up the company policy. What are rules around this?” For some issues, this kind of information will be crucial. But what an organizations does with this information and the response it makes will be crucially important. For some, the default response is an adversarial, hard-nosed, “take no prisoners” approach. What are the likely consequences? One of the parties in the dispute might win big; the other might have to make concessions. It is more likely that neither of them will get everything they sought. In any case the relationship is probably finished. Each party will then have to expend time and effort building new relationships, probably at great cost.

A less adversarial approach to conflict resolution can help preserve and even strengthen relationships. A great example of this was the intellectual property dispute between Digital and Intel back in the late 1990’s. Digital filed a patent infringement suit against Intel; Intel filed a lawsuit seeking the return of crucial documents from Digital. Claims and counter-claims went back and forth and both companies saw their share prices fall. Luckily, while lawyers for both companies were preparing to bring the various matters to court, the directors of Digital and Intel kept meeting and talking. Eventually, working together, Digital’s president Robert Palmer and Intel’s COO Craig Barrett worked out a preliminary agreement that was acceptable to both companies and advantageous to both. I believe that the case is still studied in business school as an example of creative problem-solving and skillful management.

There’s a saying in business that, relationships are worth more than gold. I think that sums up why effective conflict resolution in the business context is both an ethical issue and a management issue.