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