Conflict Management And Negotiation Management Essay

The reason behind integration of Arthur Anderson Canada and Deloitte Touch is a strategic move towards dominating the industry and crushing competition. Terry noble is the appointed co-chair of the integration team responsible for undertaking such sensitive task. The purpose of case study is to analyze this integration from an organizational behavioural point of view and bring forth the issues this organization is facing such as how to bring about this change? What obstacle will they face? And what results might these changes achieve?

Conflict Management and Negotiation

“Conflict can be defined as a process that begins when one party perceives that another party has negatively affected, or is about to negatively affect something that the other party cares about.” Organizations are faced with numerous types of conflicts everyday between employers, employees and other concerned parties. Conflict, isn’t always necessarily bad some seem to support the goals of the group or organization and help towards improving performance, these are called constructive/functional conflicts. Some conflicts on the other hand tend to hinder group performance; these are considered destructive/dysfunctional forms of conflict. The criteria taken into consideration which separates the two forms is performance, if a group cannot achieve its goals due to conflict, it is considered destructive.

Deloitte & Touche might have to face many potential problems in the future due to their integration with Arthur Anderson. The first problem they face is of the employees feeling neglected. According to the third survey, it is apparent that Deloitte employees feel neglected. The cause of such feelings are due to the fact that there is heavy emphasis on making the integration and the transaction as seamless and as fast as possible, due to which a heavy emphasis is focused on making the new Andersen employees feel welcomed. Employees at Deloitte do not seem to understand why there is such an emphasis on these new comers or “damaged goods.” This neglect can lead to internal squabbles not only with Andersen employees, but also within Deloitte itself between managers and senior executives. This conflict could have been prevented if the management took strides to communicate effectively to their employees as to why the integration was happening and why were certain individuals being treated a little different. This perception of Anderson’s employees as being “damaged goods” was developed due to people listening to the company’s grapevine, even though Anderson has been known to set market highs before the Enron scandal.

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A second set of problems arises known as inter personal conflict. The personalities of individuals involved in an organization play an important role in conflict resolution. Interpersonal conflict arises when the parties in conflict are unable to resolve personal issues with each other. Here, employees at Deloitte feel that they are superior to Anderson employees as they describe the new comers as “damaged goods” and that Deloitte saved them, and they should be grateful they have found a good home. Even though this opinion might not be shared by all employees, it is still a potential catalyst for a future conflict. This leads to a dysfunctional conflict as employees at Deloitte have information over Andersen employees, they have power over them. Since, Andersen employees will be new to the new organization and culture they will need guidance from fellow colleagues at Deloitte. If this information is withheld from them it would reduce productivity significantly and tension between the employees.

In a workplace as sensitive as this, we require managers who are quickly and effectively able to diffuse situations of hostility. Conflict, is known to halt productivity, and if not dealt with effectively leads to a loss.

There are many ways to resolve a conflict, some of them being avoidance, yielding, and problem solving, and compromising. Mr. Nobles is participating actively in the integration process. The best conflict management strategy available to Noble at this time would be problem solving. Problem solving serves the best means for conflict resolution because it is high on cooperation and assertiveness. The resolution from this method results in a win-win situation because the agreement is meant to satisfy each of the parties involved. This type of strategy excels when the concerns of either sider are too important to compromise, which they are in this situation. Problem solving is also used to gain commitment through consensus, merge two different perspectives and to mend relationships (Langton, 2010). The integration of these companies has not been successful at this point and by merging the two different perspectives into one culture through the use of problem solving, it could increase the chances of a successful integration and match expected profits.

Organizational Culture

Organizational culture is a pattern of shared values, beliefs and assumptions considered to be the appropriate way to think and act within an organization. It is obvious that the organizational culture in this case is split. The values of neither organization mesh well event though they are both from the same industry, and should have similar values and beliefs. There is a clash of cultures here as each company’s trying to function under a new environment while still retaining their individual values and beliefs. This is apparent to their organizational artifacts. Organizational artifacts are aspects of an organization that you are cans see, hear and feel.

The beliefs, values and assumptions revealed about Deloitte regarding the integration in this case are apparent in its artifacts. The integration has disrupted the status-quo, thus causing tension between the two entities. One of the assumptions revealed about Deloitte’s top management is that they are focusing on the smooth transition of Anderson employees, and disregarding their own employees. This causes a high level of tension between the two entities, and can be seen by Noble’s concern regarding how the business would be affected due to offsite work.

Deloitte also came up with a new logo regarding the merger between Arthur Anderson and Deloitte & Touche. This logo represents the shift from one culture to a new one. The new culture is “Making a difference together”, meaning Deloitte accepts its new partner. This creation of a new logo points to Deloitte’s new values and beliefs, they are reinstating the idea that they are happy by this merger and are willing to do what it takes to make its new employees welcomed and provide them a sense of belongings. This material symbol is tangible and represent, strengthens the new values Deloitte is trying to express to the public.

Deloitte believes that integration with Andersen would strengthen the existing capabilities of the company. Deloitte’s original values of recognizing client’s importance and dedication to upmost quality of their needs while focusing on employee issues stays , and Andersons belief in client’s needs above everything else is merged in. This will provide Deloitte with a competitive edge against the other big entities.

Anderson’s employees have always had a strong drive to focus on their clients, which led to the industry benchmarks they had set that the competition was unable to beat.

Leadership

I believe Terry Noble takes on the role of a leader. He is leaned more towards the long term orientation of this merger. In the case he says, “Integration is easier said than done. It takes at least three to five years. There is often a strong tendency on the part of those leading the change to declare victory too soon.” Noble behavior points him to be a leader as he is concerned with the long term success of the integration, and the formation of a new vision for Deloitte. By creating the new logo Noble is challenging the status quo of the company to a new norm. This change in the status quo is the key factor that distinguishes a leader form a manager. Leaders are known to challenge the status quo whereas managers tend to focusing on maintenance of the status quo.

Noble also challenges the results of the pulse survey by asking why Deloitte’s employees feel the way they do. Instead of carrying on with the integration swiftly, he wanted to inquire whether this view of neglection is held by a majority. Noble is concerned with the clients seeing the tension within the firm, and opting not to do business with them. He is not satisfied with the current status quo and is pushing forward to removing this tension with more meetings and plans ensuring the smooth integration of both firms.

A transformational leader inspires followers to transcend their own self-interests for the good of the organization; they can have a profound and extraordinary effect on followers. People will follow an individual who inspires them, someone with a vision, passion and a firm belief in this vision. Transformational leaders achieve goals by injecting enthusiasm and energy in their employees. A transformational leader starts of a vision of the future which will excite and get followers on board. The next step is to sell the vision. Selling this vision requires commitment, trust and personal integrity, all of which can be found in Noble. For the vision to be successful it is important that the leader is upfront, visible and leading the charge. They show by their attitudes and actions how everyone should behave. Noble has proven that he possess all these characteristics as he is concerned with the satisfaction of all his colleagues ( add background).

A transformational leader being present at Deloitte would lead to more confident, committed and loyal employees. With a strong leader setting an example through personal endeavours will slowly get employees on board towards the new status quo. However, these employees would not jump on board simply because they are required to but due to the fact that they feel motivated, and inspired; and they actually believe in the change Noble is trying to bring about.

Now, the path goal theory states that it’s the leader’s job to assist their followers in obtaining their goals and provide the necessary support to ensure their goals are compatible with those of the organization. If you find out what the employees want, reward them accordingly, and express to them exactly how they can achieve these rewards.

For a path goal theory to be implemented successfully at Deloitte, it is necessary that Noble ensures that both Anderson’s and Deloitte’s employees wants are met, and that these wants are met accordingly. Keeping these wants in mind while moving towards a new culture makes it a much smoother transition as both sides are have found some common ground. Not only would the path goal theory provide incentive to the employees but also help unify the split in one way or another.

4

The rational decision-making model incorporates six steps:

Define the problem.

Identify decision criteria.

Weight the criteria.

Generate alternatives.

Rate each alternative on each criterion.

Compute the optimal decision.

The first part of decision making is to define the problem. The assumption is that the problem is easy to identify, is clear, and the decision maker has all the information regarding the decision at hand. For the purpose of this case the decision that needs to be made is whether Anderson Canada should merge with Deloitte & Touche or not. Next, comes identifying the criterion. For the integration to occur successfully Noble needs to identify what is important to Deloitte as an organization. Some items that Deloitte might be concerned with when developing the criteria should include things such as the type of employees they want, what type of skills are required by the company? Would the integration help increase or decrease the company’s goodwill? Will the clients stay? The assumption here is of known criteria, meaning that we have met all the relevant criteria, its alternatives and consequences. But, determining this criterion will be a difficult task as there are hundreds of issues that need to be considered, the ones listed above are just the tip of the iceberg.

Now, we move onwards to the third step which asks us to weight the criterion. For this step Noble has to allocate weight to each issue, stating which issue should be weighed at what percent out of a hundred. This leaves Deloitte with a prioritized list of what needs to be achieved. For example, it is obvious that for Deloitte the hiring of Anderson’s employees and the skills they bring with them is more important to them than what the public might think of them after the merger and what effect it might have on their reputation. The assumption here is of clear, constant preferences and that there is no time or cost restraints. It is important that the criterion is clear and constant because Deloitte has an over whelming amount of criteria that needs to be considered which makes it difficult to decide what comes before the other.

The fourth step involves generating alternatives to the criterion suggested. For example here Deloitte has to consider what would happen if they do not merge with Anderson Canada. Where would Anderson’s employees go? Will they simply vanish? Would they go to a competing firm such as KMPG? Or would they go to Ernst & Young? Is Deloitte capable of handling such competition?

The fifth step is similar to what we did in step three, but instead of evaluating the criterion we evaluate its alternatives. Here Deloitte will have to take the alternatives into consideration and rank what is most important for the organization. The assumption here is that there is no time or cost constraints. There is enough time for the decision maker to obtain full information about the alternatives, and prioritize them on scale. Deloitte, in this case has some time restrictions place upon it, because the company is in need of a swift integration.

The final step is to choose the best option providing optimal results for the organization, and ranks the highest score on the criterion. The assumption here is of maximum payoff, meaning the chosen decision yields the highest value for the organization as a whole. Deloitte chose to move onwards with the integration, not only does this decision strengthen the organization but it also reduces the chances of the competition getting tougher.

Yes, ethics are a dimension in this case; this is made evident through the use of utilitarianism and care ethics. Utilitarianism in essence is concerned with maximizing the good and minimizing the bad. Deloitte believes that this integration will help strengthen the organization as a whole because Deloitte would be adding to its staff over a thousand highly trained professionals, which in turn leads them to being more successful and appealing in the market place. They believe that that if this merger takes place and is successful there would roughly be an increase of 90-180 million dollar worth of increase in the company’s billing, thus encouraging growth. Here it is obvious that the integration with Anderson Canada has more pros then cons, because if Anderson Canada was to integrate with another organization not only would Deloitte loose a substantial amount of billings, but the competition would get tougher too.

Care ethics is defined as a practice or virtue rather than a theory; it involves meeting the needs of ourselves and others. It builds on the motivation to care for those who are dependant and vulnerable. After the Enron scandal Anderson Canada even tough loyal had their image tarnished and most of their business lost. It was Deloitte that believed that leaving these highly skilled professionals out in the called due to a scandal they had no part in is wrong, saving the vulnerable and showing a dimension of care ethics.

5

The book describes organizational structure as defining how jobs are formally divided, grouped and coordinated. There are various aspects of organizational structure are listed below:

Work Specialization

Departmentalization

Chain of command

Span of control

Centralization and Decentralization

Formalization

Work specialization is the degree to which the tasks in the organization are subdivided into separate jobs. At Deloitte there is a high degree of work specialization. Departments are split up and each is responsible for providing specific type of service, and individuals are responsible for a certain task in the department. Each individual might be contained to a specific department, but boredom is avoided because each client has different needs which provide the employees with new challenges. Mr. Noble’s integration team also has a work specialization. For instance, the integration team consists of heads of functions officers whose duties are to execute a supportive plan from Human Resources department, and the Information Technology department to ensure the transitions are seamless.

Departmentalization is the grouping of common tasks together. Here we look at the basis of how can these jobs be grouped together, and what belongs where? Deloitte follows a fourfold system. Its departments are split into assurance and advisory which provide attest services. Financial Advisory department which essentially offers crisis management services such as solving business crime. Next we have consulting services, these services are meant to help clients develop and enhance their business strategies. Lastly, we have the tax services which do both personal and corporate tax filings. Various departments are created at Deloitte to offer better customer satisfaction, which can only be done through specialization.

A chain of command is an unbroken line of authority that extends from the top of the organization to the lowest echelon and clarifies who reports to whom. Since Deloitte is a giant organization it gets hard for a single team of managers to take control and maintain the status quo in each and every department nationally. Therefore, there is a set up in placing delegating individuals to carry out specific duties and then communicate these results back to those in higher command.

At Deloitte major decisions are made by top management with little consideration given to those in lower levels of the organization. This is apparent through the members of the integration committee and that even though pulse surveys are committed, they might not play a major role in the decision making process. This refers to centralization, the degree to which decision making is concentrated at a single point in the organization.

Formalization refers to the degree to which jobs within the organization are standardized. Formalized jobs involve lots of rules and clearly defined procedures. Deloitte being an accounting firm will have formalized rules in place regarding input, processing and output of tasks. What needs to be done, and how it should be done all need to be conducted according to organizational standards and procedures.

6

Deloitte has a survey in place called the Pulse survey, which takes place randomly every month and asks people various questions about the integration and their opinions. This is a change process known as action research, where a change action is based on the systematic collection of data and what it indicates. Mr. Noble is using this survey as a benchmark unit; remedial actions are taken if integration goals are not attained at various stages. For example the feedback received from the third survey is subpar, and this is what Mr. Noble will be using to express his concerns about the integration process during the September meeting.

This data is important because first of all it is authentic since it is anonymous, second it is monitoring the change inside the company and of the employees. Employees are provided an opportunity to share their true feelings without any repercussions. The Pulse survey is an accurate form of measurement in aspect to evaluating the success of the integration process and its effect on the organization.

The force for change in this case is of competition. It is obvious from the case that Deloitte does not want to lose Andersen’s employees to competition. This is reinstated in the case over and over again through comments such as ” although it was thought that rival accounting firms – either KPMG or Ernst & Young-already had a deal to acquire Anderson, Deloitte’s senior management team was pleasantly surprised when it found out that Andersen U.S. tax practice had urged Andersen Canada to talk to Deloitte” or the fact the case states “Closing the transaction quickly was critical because a lengthy process increased the risk that a major client and a significant number of talented professionals would be lost.” If Deloitte had not chosen to integrate with Andersen Canada its skilled workers would have ended up working for the competition. Also, Deloitte would have missed out on millions of dollars’ worth of billings.

Kurt Lewin argues that successful change in an organization should follow three steps:

Unfreezing

Moving

Refreezing

The unfreezing stage requires efforts to overcome the pressures of both individual resistance and group conformity, thus enabling the unfreezing of the status quo. Here Mr. Noble has to change the old culture at Deloitte and try to start moving the organization towards a new combined values and beliefs of Anderson Canada and Deloitte & Touch. The driving force in this scenario would be of a much more successful and competitive image of Deloitte after the integrations. Whereas, the restraining forces are of those employees not wanting change.

The unfreezing process has already started at Deloitte. The integration team has already introduced a new logo and slogan for the organization which embodies the idea of both these organizations working together. Mr. Noble can further unfreeze the current status quo by winning over managers and employees through the role of a transformational leader. Another tool for unfreezing can be of offering extrinsic and intrinsic awards which encourage employees pull away from the old fashioned ways of getting things done towards a new status quo.

The second step is of moving. Moving involves getting employees to jump on board with the idea of a change. Mr. Noble is trying to get individuals involved the process of change trough open, anonymous communication where individuals are actively encouraged to voice their opinions. Individuals are given new titles, new surroundings, and new colleagues which might also act as a positive incentive for some individuals.

The last step is of refreezing. Refreezing is stabilising a change intervention by balancing driving and restraining forces. In simpler term refreezing is making the change permanent. Cultural change in an organization is a slow and lengthy process, and the only way it is possible to maintain and firmly put in a new status quo is to make sure there are strong controls in place to make sure the culture does not into its old ways. A good way of maintaining the new status quo would be to reward employees based on the new culture, and making it clear to the employees, how these rewards can be collected.

Another model for implementing change is Kotter’s eight step plan:

The first step is to establish a sense of urgency by creating a compelling reason for why change is needed. Here Noble needs to clearly communicate why this integration is important, and how it will give Deloitte a competitive edge. He also needs to express the reasons as to why the process is moving so rapidly. This would help get the employees support and remove any misunderstandings and feelings of neglection.

The second step is to form a coalition with enough power to lead the charge. This coalition of power can be found within the members of the integration team. Equal members from both Deloitte and Andersen are on the team. Effort was also put into ensuring that key people from both sides are also involved.

The third step is to create a new vision to direct the change and strategies for achieving the mission. Mr. Noble has already accomplished this by creating a new logo and coining the phrase “making a difference together.”

The fourth step involves communicating the vision through the entire organization. This is can be done through various communication channels ranging from emails to face to face conversations. The best form of this is through the pulse survey because not only does it inform the employees of the integration but asks them of their opinion.

The fifth step is to empower others to act on the vision. Even though departments are encouraged to do this themselves, minimal effort was put in which resulted in minimal results. It is necessary that we empower others to first bring about this change first in themselves and then in others. In order for this to take place we need to provide these individuals with the right kind of environment and motivation. This motivation can be increased through offering various rewards which will entice the employees to adapt to the new vision.

The sixth step involves planning, creating and rewarding short term wins that move the organization towards the new vision. Due to the limited time frame provided for this integration to take place in Mr. Noble hasn’t really had a chance to fulfill the requirements of this step yet. But, once again the new vision can be accepted via both extrinsic and intrinsic rewards.

The seventh step is to consolidate improvements, reassess changes and make necessary adjustments to new programs. The pulse survey allows Mr. Noble to reassess the progress in change and the attitudes of the employees towards integration every month. This helps makes the necessary changes needed for promoting its future success.

The final step is to reinforce the changes by demonstrating the relationship between new behaviors and organizational success. This could be done through presenting the financial statements to the employees and pointing out how much the company has grown since the integration, and how much of the increased revenue was earned due to the Andersen employees.

Terry Noble can expect to face resistance on two levels, individual and the group level. At an individual level Mr. Noble will be faced with individuals in pursuit of their own interests, and those who are victims of misunderstandings. It is stated in the case that “many people will be concerned with ‘me’ issues, my office, my promotion, my salary, etc.” Employees at Deloitte are worried about the effect this merger would have on the individually, as in what would happen to their job? Would they be replaced? Etc. this refers to their need of security and economic factors. Employees are unaware of what will happen if this integration takes, they are scared of the unknown. Another reason for resisting change is due to selective information processing, here the individuals hear what they want to hear and ignore the information that challenges these views. This is apparent through a common misunderstanding at Deloitte, its employees are undermining those that are from Arthur Andersen labelling them as “damaged goods” and that “these people should be lucky they have found a good home.”

There are also various reasons why group resistance might be present, the first reason being structural inertia. Each organization has their own processes and formalized regulations and when confronted with a change such as integration this inertia acts as a counter balance to sustain stability. Second, organizations are made up of a number of interdependent subsystems. One cannot be changed without affecting. Therefore, adding new employees who are not accustomed to the way an organization works may affect the dynamics of a department which will result in resistance. Third reason is due to group inertia. Even if individuals did want to change their behavior, group norms may act as constraints. Also there is a threat to expertise where changes in the organization may threaten the expertise of specialized groups. This will be a major restraint because the thousand new employees will need to fit within the four fold system at Deloitte, which will cause disturbances and lower performance while these newcomers get used to the environment.

8

Organizational culture helped me understand this in a different light. If I were to look at this case before the taking this course I would look at it more from an accountant’s point of view. I would have focused on the monetary side of the equation and would have never even bothered with all the people related factors at work. From a strictly numerical analysis it is obvious why the integration was the best decision. If successful, it would increase the organization’s annual revenue.

Now if we are to look at this case from an organizational behavior point of view we are given a much clearer view of the forces at play here. We notice that there is a lot more at play here than just numbers. Employees don’t care about numbers. They care about to goals, visions and beliefs an organization has to offer.

Most people as a habit are afraid of change. This might be due to various reasons ranging from just anxiety to much deeper forms for resistance such as the things they believe in. organizational behavior in this case helps me recognize why people are afraid of change. The issue in this case is to get two different organizational cultures to mesh together. From the beginning of the integration talks there is conflict brewing. This can be due to various reasons such as personality conflicts, functional and dysfunctional conflicts, and lack of communication, misunderstanding, and lack of trust in those in charge. Mr. Noble has also been noted in the study stating “‘A Frenchman and an Englishman will always retain their culture. But can they learn to work together to achieve a common goal? Or can they really? It takes a lot of effort and patience to help new behavior and practices to grow deep roots.” Integration is a very sensitive task, with the slightest false move a whole organization can be put in jeopardy. It is necessary that both accounting and organizational behavior work together hand in hand to be successful.

Conclusion