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Strategic Resolve

Conflict resolution is entering a whole new strategic domain, which means HR needs to get better at detecting and discussing the battles that really matter.

Monday, July 11, 2011
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Several years ago, when GTSI Corp. in Herndon, Va., added a professional-services capability to its core business as a reseller of technology products, Bridget Atkinson, chief human capital officer, suddenly found she had her hands full.

Her company had decided to expand from a products-focused organization into a products-and-professional-services company by creating a new unit devoted solely to services. Simple enough.

Revenue and margin targets were assigned to the sales group as well as to the new professional-services organization. Sales would own the customer relationship and would try to create each client's additional consulting and support-services account. Once the business was booked, professional services would take over and deliver said services to the clients.

What could go wrong?

Plenty, Atkinson soon learned.

Communications started breaking down. The sales team wasn't including services in the initial scoping and selling of said services, but the latter still had to deliver on promises they were never consulted on. Some services were being oversold, with no realistic way for the new unit to deliver. Sales reps were sometimes throwing services in for free so the latter couldn't bill for the time and record the revenue.

Imagine the ruffled feathers when, "although both organizations were held accountable for driving the revenue number, only one -- sales -- was in control of actually identifying and capturing the new business," says Atkinson. Accusations between sales and services teams flew back and forth, each claiming the other was to blame for service's eroding margins. 

"There was enormous conflict between the two sides of the house," she says. "I, personally, was getting tired of hearing from them."

Luckily for GTSI, Atkinson -- author of a 2007 article published by Aspatore Books, entitled Workplace Conflict Resolution: Tips to Effectively Manage Workplace Conflict and a 2008 Human Resource Executive® HR Honor Roll recipient -- understood her business enough to be able to walk into the hornets' nest and determine the source of the problem.

Luckily, she knew her company's strategic goals well enough to articulate in a meaningful way what wasn't working -- and what could be done to remedy the situation and achieve them.

And luckily for her company, that knowledge and articulation had earned her enough trust and respect from the CEO, line leaders and employees that they all listened to her when she suggested -- in the interest of making their new business opportunity work -- that they sit down and start a conversation.

Guided by Atkinson and her HR team, both sides "were able to start to build a bridge ... and a road map to improvement," she says. They now get together regularly and share differing perspectives. They have ongoing coaching sessions. "We've heard far fewer negatives," she says, and the revenue and margin targets are now being met.

Unfortunately, many companies lack an HR leader such as Bridget Atkinson who is capable of turning a conflict like this around. One recent study by the Centre for Effective Dispute Resolution in London, entitled Tough Times, Tough Talk, found a measly 16 percent of 1,000 U.K. workers believe HR is best suited to resolve conflicts in the workplace.

Conflict-resolution experts say those figures are comparable to sentiments in the United States -- where, as Ilene Gochman, senior consultant at New York-based Towers Watson, says, many employers she works with are responding to employee-engagement problems by "training managers and employees in conflict resolution, not by referring employees to HR."

This isn't necessarily a bad thing if the issue is one that should be handled by a manager, say experts, but HR is missing the boat on the bigger, business-centric conflicts as well.

Part of HR's black marks have to do with employees' perceptions that HR professionals are simply mouthpieces for top management -- not people you can trust with your problems, some experts say. David Lipsky, Anne Evans Estabrook Professor of Dispute Resolution at Cornell University's ILR School and director of the school's Scheinman Institute on Conflict Resolution, says there's a reason for that perception -- some of it even based in reality.

"It's extremely difficult for HR to be impartial," he says. "It's HR's job to uphold the systems and processes in place at a company. It's impossible to believe in the policies and do your best to implement them, and then be an objective bystander when problems arise and people start questioning them" or one another.

"It's fair to say HR is not equipped to handle the full complement of conflicts that may affect an organization," says Lipsky, but that doesn't mean HR has no role in addressing them. It all comes down to knowing when to step in for the good of the business.

Mark A. Hyde, a conflict counselor and the employee-assistance-program manager for the Rochester, Minn.-based Mayo Clinic, agrees HR needs to do a better job of knowing what conflicts not to get involved in, such as "run-of-the-mill weekly complaints" that managers should really handle or one-on-one employee or employee-manager disputes in which HR simply can't be neutral or objective. (See sidebar.)

In addition to not choosing the right fights, say experts, another problem lies in what HR graduates are taught in school and how they're trained. For them to become truly trusted in conflict management, says Lipsky, the training needs to extend well beyond mediation and personal disputes, where, all too often, the mediator "creates situations where people are playing zero-sum games with one another" -- i.e., if something's granted to one, it's taken away from another.

HR professionals, he says, need to be trained "to embrace conflict as something that can move an organization forward" and they need to serve more as catalysts who can "stimulate a larger -- sometimes difficult -- corporate conversation so it's not competitive.

This might involve conflicts between departments, between employees and management ... there are different categories and levels," he says, and HR professionals need to understand them and know when the breakdown requires them to act.  
 
In that enhanced role, he adds, they should also train managers to embrace conflict similarly and to evaluate them on their ability to do so.

The key to improving all these skills, say Lipsky, Atkinson and other practitioners and experts, is in knowing the business and its people so well that you can identify and even anticipate problems -- be they lower-level eruptions or top strategic boilermakers -- before they come knocking on HR's door or someone else's.

"If you've learned the business, you can understand and detect the problems," says Atkinson. "If you've already established trust with top leaders, through business knowledge and the courage to speak up, even in the most top-level [potentially business-damaging] disputes, you can get them to really tackle the tough, higher-level problems" and come out on the other side with effective, business-saving solutions.

Not only will this trust in HR -- coupled with HR's willingness to proactively tap into and tackle business problems -- help your company, she and others say; it will also help elevate HR to that long-coveted and confoundedly elusive next level.

In the words of Jim Camp, president and CEO of Dublin, Ohio-based Camp Negotiation Systems and author of Start with No: "There's no way HR leaders will ever become strategic leaders without the most sophisticated negotiating skills. I believe that someone, somehow, has got to create the vision for HR leaders that they're putting themselves and their profession in a bad place without these skills."

"Pouring Fuel on the Fire"

In his book, Camp describes how the "win-win" compromise method of conflict resolution, often taught to law-school and business-school freshmen, isn't just ineffective when used by HR professionals; it can be downright disastrous. In his experience, he writes, "I quickly learned that it's all too often win-lose," because on one side of the negotiating table is a tiger who won't budge and on the other is someone who gave in. "The promise is just manipulation," he writes. "It's all double-talk."

Most of the messes Camp is called on to clean up in his consulting work as a negotiating coach were created by HR professionals who "learned compromise-based bargaining," he says. "They think it's their job to broker a deal. And because of that mind-set, they're pouring fuel on the fire."

In one recent case, Camp was asked to help a company out of profoundly sticky wicket involving an HR professional who had offered a severance package of $600,000 to an employee who had come to HR complaining of sexual harassment by a supervisor and was ready to quit.

"This HR person was actually making an offer of settlement [instead of launching an investigation] that put the company in a bargaining position," Camp says. "An attorney saw the dollar signs attached to the case -- an easy argument that his client was offered [shut-up money] -- and that person turned around and sued the company for $6 million." Clearly, legal training was just as lacking as conflict-resolution skills in this particular incident.

The case has since been settled and Camp wouldn't divulge details, but he did say the incident was "just one of many cases I get from company leaders who come to me saying, 'I need your help. My HR people are going to cost me a fortune.' "

Moreover, he says, "I know a lot of CEOs who don't trust their HR people because they lack good, strategic negotiating skills and can't articulate solutions in terms of thoughts, ideas, concepts, corporate missions, long-term goals ... the stuff that gets a CEO's attention."

Part of truly negotiating, he adds, is "not backing down, not compromising; if you want to resolve conflict, you need to have a vision for the business and the self-confidence to argue that vision [as part of a negotiating discussion] with your CEO and other top leaders."

Greg Smith, executive vice president of human resources for New York-based Denihan Hospitality Group, did just that back in 2008 after his company acquired New York-based James Hotels and brought 13 new senior leaders into the ranks of top management. Already exacerbated by the recession, tensions were mounting between James executives, known more for taking risks, and Denihan leaders, who were considered more risk averse, says Smith.

"People in the C-suite were making power plays, quietly trying to establish how far their authority would go, pushing for their way to be the right way," he says.

There were layoffs at the now-1,925-employee organization, disagreements over what skills and competencies were needed to move forward -- such that managers were at loggerheads over hiring and promotion decisions, and morale was sinking (evidenced by the atmosphere and engagement surveys, says Smith).

Making matters worse, many top leaders who could see the trouble were reluctant to speak up in the newly merged company, still reeling from the cultural changes brought on by previous acquisitions in 2006 and 2007. "Everyone was afraid of stepping on somebody else's toes," says Brooke Barrett, co-CEO along with Patrick Denihan, "so no one was really communicating" about the decisions that had to be made around customer service, talent management, pay and benefits -- basically, every detail involved in bringing cultures together.

Something had to be done to "preserve the family-business culture of treating others with respect, integrity and genuineness," says Barrett, while continuing to hold people accountable. Although many noticed the problem, Smith says he was the one who "was pretty loud and out front in saying we had to do something about it."

A member of Denihan's advisory board, Michele Darling -- president of Mississauga, Ontario-based HR consultancy Michele Darling and Associates and former executive vice president of corporate governance and human resources for Prudential Insurance Co. -- steered them to a process called Strength Deployment Inventory, which focuses on self-assessment and relationship awareness as keys to understanding motives behind behaviors.

Each member of the senior leadership team filled out extensive assessments and were then guided by Darling, through coaching and counseling sessions, to examine how each of them obtains, processes and presents information.

Everyone, says Darling, "had their own personal styles -- how they behaved when things were going well versus how they behaved when things were going less well." From that self-discovery, she says, they developed skills for resolving conflicts early on. "The longer you wait," she says, "the more problems you have."

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Now, says Barrett, "I see how I approach problems wanting the facts, whereas Greg wants to get things done. It really helped us to understand where the other person was coming from."

Smith says he can now get things done more quickly because he's "more familiar with how Brooke collects facts and processes them."

But Smith and Barrett are just one example of what worked at Denihan. Darling describes two other disputing leaders who, after going through the SDI process with her and exploring one another's needs and motivations, came to a "moment when they both realized how much they had in common" and could actually help each other reach their business goals. Smith says he knows of many similar stories.

Though only the senior leaders at Denihan have gone through SDI, the feedback -- including survey scores -- indicate "we are all getting quicker in our decision-making," he says. (The company is now looking to roll out the SDI program companywide.)

Conflict, says Smith, is hardly a simple or soft business issue. "Confrontations, faced head-on, are good things, strategic tools that increase the stability and ability of your leadership team; they're moments to move a company forward," he says. "Everyone here wanted their way to be the way the organization would eventually go, without being open to a more collective, collaborative notion of change.

"It was my job to help senior leaders have those conversations," he says. "I'm not an expert in finance or any other [non-HR] function, but I can't be effective in my job if I don't understand those leaders and functions in an intimate way and know when and why they're in conflict.

"It's not my job to lead them to outcomes," Smith adds. "It's not even my job to predict outcomes. It is my job to be able to converse with all these smart people and get them to converse with each other about what their issues and conflicts are. Then, it's my job to follow up and constantly ask, 'Where are we with this?' and to know when the organization is veering into a 'backslide' " and needs to go at it again.

Strategic Problem-Solving

Detecting those problems and gaining an organization's trust in handling them means HR needs to engage in more of "the old management-by-walking-around concept," says Peter Hiddema, founder and CEO of Common Outlook Consulting Inc. in Toronto.

That, he says, and making sure people don't perceive their HR executives as having "skin in the game" -- a.k.a., a reason for wanting a certain outcome -- when they do choose to speak up and address a problem.

Such was the case with one of his clients -- a chief human resource officer for a multinational insurance company -- who knew enough about her business and its ambitious new growth goals to see they weren't going to be realized if management didn't start treating employees differently.

The CHRO had been hearing from both sides -- managers who were experiencing problems getting projects into the pipeline in a timely way, and employees who felt like too many meaningless meetings were being scheduled. What's more, employees "thought there was insufficient prioritization," says Hiddema, "and when they asked managers to prioritize the added work, they were told it was all important.

"So the workers said, 'OK, then, we need more money for more people,' and they were told 'No.' " Essentially, employees were feeling overworked, over-scheduled and not listened to when their feelings were expressed. Suffice it to say, morale was low.

The CHRO, says Hiddema, was the catalyst for change because she was "able to make the business case to the CEO and senior leaders, saying, 'We [in HR] don't think you're going to get your goals met if you don't get some help in here.' "

She "had the guts and courage and knowledge of the business to be able to go to the CEO and senior leaders and say, 'You have a problem that will affect your strategic plans.' " More importantly, he adds, she knew what those goals were and how the morale problem would interfere.

At the meeting, which Hiddema assisted in, everything was aired, collectively. Though more meetings are in the works, changes in programs and policies have already been implemented. A new model for managing meetings has been introduced whereby invitees are instructed to decline a meeting invitation if it doesn't contain "identified and defined goals and philosophies, and an explicit list of who all is invited and why," says Hiddema.

Morale and productivity, he adds, are already on the upswing.

What works in a situation such as this goes beyond a CHRO having the knowledge and guts to bring a workforce dispute to the C-suite. It also reflects what Jackie Greaner -- talent-management and organizational-alignment, North America practice leader for Towers Watson -- considers HR's much-needed ability to establish more objective, forthright relationships with top managers so those difficult conversations can happen.

"There are many of us in the consulting realm," she says, "who think HR is just wanting to be friends with their top leaders. If HR is there to serve [top leaders'] best interests, HR cannot be their best friends."

Like Hiddema, Greaner also stresses the importance of detecting problems by "walking the floor."

"If you're an HR leader and you're seeing behaviors in your workforce that aren't productive" at any level, C-suite or otherwise, "go in there and spark the discussion about the things people should be talking about, not what you think they want to hear."

Can HR achieve this higher form of proactive conflict resolution, this mediation to move the business along, this "right kind of win-win," says Lipsky, "where everyone really is a winner because everyone learns" from the difficult process?

So far, he says, only a handful of organizations -- such as GE, Raytheon, PECO Energy and Prudential -- have the CEOs and CHROs and other senior leaders who "recognize the importance, and the strategic view, of conflict resolution" -- and the part HR can and should play.

"But yes, I do think the next wave of what happens in HR ... won't just be confined to these few organizations. If more go through the process [that Denihan Hospitality and GTSI did], they'll see, too, how people and functions in conflict around a business problem can come to an understanding and find they actually have a lot in common and can help each other achieve their goals.

"This isn't just 'pie-in-the-sky' stuff," Lipsky says. "We're not making this stuff up. You see it operating in organizations already, just not enough of them. It's not an easy path, necessarily, but it's where businesses do need to go."

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