BACHELOR OF BUSINESS ADMINISTRATION

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1 BACHELOR OF BUSINESS ADMINISTRATION (YEAR 3) BUSINESS MANAGEMENT 3 A STUDY GUIDE Copyright 2013 MANAGEMENT COLLEGE OF SOUTHERN AFRICA All rights reserved; no part of this book may be reproduced in any form or by any means, including photocopying machines, without the written permission of the publisher REF: BMG3A

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3 TABLE OF CONTENTS SECTION TITLE PAGE Aims of the module 2 Learning Outcomes 3-4 How to use this module Introduction Managing Conflict Business Ethics Corporate Social Responsibility Industrial Relations The Legislative Framework Bibliography MANCOSA- BBA Year 3 1

4 AIMS OF THIS MODULE Upon completion of this module, the learner will be able to: Apply skills in the management of conflict within the workplace. Apply the principles of business ethics in the workplace. Discuss the role of corporate social responsibility in the business environment. Display knowledge of industrial relations and its impact on human resources. Describe the legislative framework in which a business operates. Analyse and evaluate how skills in managing conflict, business ethics, corporate social responsibility, industrial relations and the legislative environment enable effective performance within a business context of transformation. MANCOSA- BBA Year 3 2

5 LEARNING OUTCOMES Section 1: Introduction 1. Understand the structure of the module. 2. Understand the learning areas and content of the module. 3. Understand how the learning areas are relevant to each other. Section 2: Managing Conflict 4. Define conflict. 5. Distinguish between functional and dysfunctional conflict. 6. Identify and describe types of conflict. 7. Discuss sources of conflict. 8. Identify and discuss outcomes of functional and dysfunctional conflict. 9. Identify and apply appropriate strategies for the management of conflict. Section 3: Business Ethics 10. Define ethics 11. Discuss the importance of ethics within the field of business. 12. Discuss the identification and the resolution of ethical dilemmas. 13. Compare, contrast and apply the ethical models of utilitarianism, moral rights and justice. 14. Discuss how to improve an organisation s ethical climate. 15. Discuss the impact of gender on ethical practice. Section 4: Corporate Social Responsibility 16. Define social responsibility. 17. Discuss the three levels of social responsibility. 18. Identify the stakeholders to whom business is responsible and discuss their respective concerns. 19. Discuss the evaluation of corporate social performance. MANCOSA- BBA Year 3 3

6 Section 5: Industrial Relations 20. Define industrial relations. 21. Identify the participants in industrial relations. 22. Explain the tripartite relationship in industrial relations. 23. Discuss the key features of the Labour Relations Act. 24. Discuss the key features of the Basic Conditions of Employment Act. 25. Discuss the key features of the Employment Equity Act. 26. Discuss the key features of the Skills Development Act and Skills Development Levies Act. 27. Discuss the key features of the Occupational Health and Safety Act. 28. Discuss the key features of the Unemployment Insurance. Section 6: The Legislative Framework 29. Identify the legislation which impacts on organisations. 30. Explain how the legislation facilitates socio-economic transformation. 31. Identify how the Constitution is relevant to organisations. 32. Discuss the key principles and application of Black Economic Empowerment. 33. Identify the labour legislation which impacts organisations. 34. Identify the key features of the Preferential Procurement Policy Framework Act, the Competition Act, the Promotion of Access to Information Act, environmental legislation as well as key industrial and trade regulations. MANCOSA- BBA Year 3 4

7 HOW TO USE THIS MODULE This module, Business Management 301, should be studied using this Study Guide together with the prescribed texts. Prescribed Texts The prescribed textbooks for Business Management 301 are: Hellriegel, D., Jackson, S.E., Slocum, J., Staude, G., Amos, T., Klopper, H.B., Louw, L. & Oosthuizen, T. (2011) Management. Third South African Edition. Cape Town: Oxford University Press. Nieman, G. (Ed) & Bennett, A. (Ed) (2006) Business Management. A Value Chain Approach. 2 nd Ed. Pretoria: Van Schaik Publishers. These prescribed textbooks will also be used for BMG302. Recommended Reading At the beginning of each section in this Study Guide the relevant pages in your prescribed texts, which you are required to read, will be indicated. A number of recommended texts will also be listed. You are encouraged to read the recommended texts to enhance your knowledge and your learning experience. Learning Outcomes At the beginning of each section in this Study Guide you will find a list of learning outcomes. These outcomes detail the competence which you should have achieved on completion of the section. Exercises Throughout this Study Guide you will find exercises which you need to engage with. The purpose of these exercises is to: facilitate your engagement with the prescribed texts; develop your critical and reflective thinking abilities; provide you with opportunities to apply your knowledge; assess what you have learnt. MANCOSA- BBA Year 3 5

8 The exercises which you will be required to complete are Think Points ; Activities ; Reading Activities ; and Self Check Activities. THINK POINT A Think Point requires that you stop and think about an issue. It may require you to think about your own experience or provide an example. ACTIVITY An Activity provides you with an opportunity to apply what you have learnt. In most cases there are no right or wrong answers to these activities. READING ACTIVITY A Reading Activity requires that you read, reflect on and summarise a journal article relevant to the subject matter being studied. The journal articles that are referred to are available from Mancosa s electronic library (EBSCO). MANCOSA- BBA Year 3 6

9 SELF CHECK ACTIVITY At the end of each section there will be a Self Check Activity. These activities comprise multiple choice questions and provide you with an opportunity to assess your understanding of what you have learnt. Answers to these activities are provided at the end of each section. MANCOSA- BBA Year 3 7

10 SECTION 1 INTRODUCTION MANCOSA- BBA Year 3 8

11 LEARNING OUTCOMES The specific outcomes for this introductory section are that on its completion learners will: 1. Understand the structure of the module. 2. Understand the learning areas and content of the module. 3. Understand how the learning areas are relevant to each other. READING There is no prescribed reading or recommended reading for this introductory section. MANCOSA- BBA Year 3 9

12 1.1 Introduction This module, Business Management 301, forms an integral part of the MANCOSA Bachelor of Business Administration (BBA) qualification. It develops the learners understanding of the management of conflict, business ethics, corporate social responsibility, industrial relations and the legislative framework within which businesses operate. The knowledge and skills which the learner will develop in this regard will aid him / her in effectively functioning in organisations undergoing transformation. Enables effective performance within a business context characterized by transformation Legislative Framework (Section 6) Industrial Relations (Section 5) Corporate Social Responsibility (Section 4) Business Ethics (Section 3) Managing Conflict (Section 2) Figure 1: Overview of Business Management 301 MANCOSA- BBA Year 3 10

13 1.2 Contents and Structure Section 1: Introduction This is the first section of the Study Guide. It provides the learner with an overview of the key learning areas. Section 2: Organisational Culture Section 2 explores Managing Conflict and addresses: What is conflict? Functional and dysfunctional conflict Types of conflict Sources of conflict Outcomes of conflict Conflict management styles Strategies for the management of conflict Section 3: Business Ethics Section 3 explores Business Ethics and addresses: What are ethics? The importance of ethics in business Resolving ethical dilemmas Ethical models How to improve an organisation s ethical climate Gender and ethics MANCOSA- BBA Year 3 11

14 Section 4: Corporate Social Responsibility Section 4 explores Corporate Social Responsibility and addresses: What is social responsibility? Levels of social responsibility Stakeholders to whom business is responsible Evaluating corporate social performance Section 5: Industrial Relations Section 5 explores Industrial Relations and addresses: What is industrial relations? Who are the participants in industrial relations? Labour Relations Act Basic Conditions of Employment Act Employment Equity Act Skills Development Act Occupational Health and Safety Act Unemployment Insurance Act Section 6: The Legislative Framework Section 6 explores the Legislative Framework in which organisations operate and addresses: The Constitution Broad Based Black Economic Empowerment Act Labour Legislation Other Legislation Preferential Procurement Policy Framework Act Competition Act Promotion of Access to Information Act Environmental Legislation Industrial and Trade Regulations MANCOSA- BBA Year 3 12

15 1.3 Summary This section provided an introduction to this module. It outlined the contents and structure of the key learning areas, and identified how these learning areas enable the learner to effectively perform within a business context of transformation. MANCOSA- BBA Year 3 13

16 SECTION 2 MANAGING CONFLICT MANCOSA- BBA Year 3 14

17 LEARNING OUTCOMES The overall outcome for this section is that, on its completion, the learner should be able to demonstrate an understanding of managing conflict within organisations. This overall outcome will be achieved through the learner s mastery of the following specific outcomes, in that the learner will be able to: 1. Define conflict. 2. Distinguish between functional and dysfunctional conflict. 3. Identify and describe types of conflict. 4. Discuss sources of conflict. 5. Identify and discuss outcomes of functional and dysfunctional conflict. 6. Identify and apply appropriate strategies for the management of conflict. MANCOSA- BBA Year 3 15

18 READING Prescribed Reading: Note: Managerial conflict is not directly addressed in either of the prescribed texts. Learners are therefore advised to use this Study Guide as the primary text. As with all sections, it is also recommended that learners consult some or all of the recommended reading. Recommended Reading: Books Cook, C.W. & Hunsaker, P.L. (2001) Management and Organisational Behaviour. Third Edition. New York: McGraw-Hill Irwin. pp Jones, G.R. & George, J.M. (2003) Contemporary Management. Third Edition. Boston: McGraw Hill. pp Kreitner, R. & Kinicki, A. (2001) Organisational Behaviour. Fifth Edition. New York: McGraw-Hill Irwin. pp Robbins, S.P. (2001) Organisational Behaviour 9 th Ed. New Jersey: Prentice Hall. pp Journals Pondy, L.R. (1967) Organisational Conflict: Concepts and Models. Administrative Science Quarterly. September, pp Wall, J.A. & Callister, R.R. (1995) Conflict and Its Management. Journal of Management. 21 (3), pp MANCOSA- BBA Year 3 16

19 2.1 Introduction Today s organisations operate within a changing environment. The ongoing developments in technology require that organisations regularly update their processes and equipment; the need for socio-economic transformation requires that organisations enhance the diversity of their workforces and manage it effectively for business benefit; and current labour and BEE legislation impacts on the ownership, control, human resource practices, procurement practices and social responsibility practices of an organisation. These are but some of the dynamics within the external environment which require organisations to change and adapt. Change generally places considerable pressure on both managers and employees, which ultimately leads to conflict. This section explores Managing Conflict through addressing the following areas: What is conflict? Functional and dysfunctional conflict Types of conflict Sources of conflict Outcomes of conflict Conflict management styles Strategies for the management of conflict 2.2 What is Conflict? Make no mistake about it. Conflict is an unavoidable aspect of modern life (Kreitner & Kinicki, 2001: 447). Kreitner & Kinicki (2001) argue that conflict is prevalent within organisations due to: Ongoing change and transformation Enhanced workforce diversity Greater use of teams A decrease in face to face communication due to electronic communication (e.g. ) Competition within a global economy which requires cross-cultural dealings. MANCOSA- BBA Year 3 17

20 THINK POINT How would you define conflict within organisations? Comment on Think Point A number of definitions of conflict are provided below: the interaction of interdependent people who perceive opposition of goals, aims and values, and who see the other party as potentially interfering with the realization of these goals (Putnam and Poole cited in Smit & Cronje, 1997: 347). conflict is a disagreement between two or more parties for example, individuals, groups, departments, organisations, countries who perceive that they have incompatible concerns ( Cook & Hunsaker, 2001: 374). conflict is a process in which one party perceives that its interests are being opposed or negatively affected by another party (Kreitner & Kinicki, 2001: 447). organisational conflict is the discord that arises when the goals, interests, or values of different individuals or groups are incompatible and those individuals or groups block or thwart each other s attempts to achieve their objectives (Jones & George, 2003: 549). MANCOSA- BBA Year 3 18

21 These definitions highlight some important characteristics of conflict: Goal incompatibility: this takes various forms within organisations. It could relate to contradictory ideas about the distribution of resources within the organisation, or it could relate to management and employees having different goals about the conditions of work (Smit & Cronje, 1997). Interdependency: for there to be conflict, there needs to be some degree of interdependency between parties. For example, management and workers are interdependent, in that management provides the vision and the workers operationalise the vision. Interaction: for there to be conflict, it needs to be expressed whether overtly or covertly. Effective communication is therefore key to resolving conflict (Smit & Cronje, 1997). Perception: it is possible for conflict to be perceived, and therefore the sources of conflict can be real or imagined. 2.3 Functional and Dysfunctional Conflict Conflict is not always dysfunctional and does not always lead to negative outcomes. Conflict can be functional as it has the potential to stimulate creative resolution of problems and corrective actions and to keep people and organisations from slipping into complacency (Cook & Hunsaker, 2001: 374). Conflict therefore needs to be understood as a dynamic which should be effectively managed rather than eliminated. As Figure 2 on the following page shows, functional conflict is essential to the effective performance of an organisation: When there is little or no conflict, organisational performance suffers. At this level, managers tend to resist new ideas and are resistant to change. When there is too much conflict, organisational performance suffers. At this level, it is likely that managers and employees are self absorbed in the achievement of their own goals and waste resources. An optimum level of conflict is required for organisational performance. This level is reached when the organisation, its managers and employees are open to a variety of perspectives and utilise disagreements and debates to promote effective decision making (Jones & George, 2003). MANCOSA- BBA Year 3 19

22 Figure 2: The Effect of Conflict on Organisational Performance (from Jones & George, 2003: 549). High Optimum level of conflict results in high performance Level of Organisational Performance Low Low Too little conflict results in performance suffering Level of Conflict High Too much conflict results in performance suffering MANCOSA- BBA Year 3 20

23 ACTIVITY Consider your experience of conflict situations. Identify a situation where the conflict was functional and a situation where the conflict was dysfunctional. Describe each of the situations in the space provided below. 1. My Experience of a Dysfunctional Conflict Situation 2. My Experience of a Functional Conflict Situation Comment on Activity Responses will vary across learners due to their different experiences. However, the outcome of the dysfunctional conflict situation will be negative and will not be acceptable to all parties, while the outcome of the functional conflict situation will be positive and acceptable to all parties.

24 2.4 Types of Conflict Figure 3 below summarises the types of organisational conflict: Interpersonal Intragroup Organisational Conflict Intergroup Interorganisational Figure 3: Types of Organisational Conflict A description of each type of organisational conflict is provided below: Interpersonal Conflict: This occurs between individuals within an organisation due to differences in their goals, values or personality. Interpersonal conflict can emerge from seemingly insignificant irritations, such as an employee becoming irritated by the way in which his colleague in the next cubicle talks loudly about his personal problems on the telephone. This irritation can escalate to dislike and ultimately result in conflict (Kreitner & Kinicki, 2001). Intragroup Conflict: This arises within a department, team or group, and relates to differences in goals, values, perspectives and personality. For example, certain members of a group may wish to spend the advertising budget on a print campaign, whereas others may feel that it would be more effectively spent on a radio campaign. MANCOSA- BBA Year 3 24

25 Intergroup Conflict: This refers to conflict between groups, teams and departments (Jones & George, 2003). A common example is the conflict between an organisation s sales department and production department where the sales department may make promises to a client which are difficult for the production department to deliver on. Interorganisational Conflict: This conflict manifests between two or more organisations. It could arise as a result of one organisation objecting to the practices of another organisation as they believe them to be unethical (Jones & George, 2003). ACTIVITY Consider the organisational conflicts that you have experienced. Provide an example of an interpersonal, intragroup, intergroup and interorganisational conflict that you have experienced or observed within your workplace. (If you are not currently employed, think about an organisation for which you worked in the past.) 1. Interpersonal Conflict: 2. Intragroup Conflict: 3. Intergroup Conflict: 4. Interorganisational Conflict: MANCOSA- BBA Year 3 25

26 Comment on Activity Responses will vary across learners, given their different experiences of organisations and conflict. Generally, however, it is likely that learners will find that they have a greater number of examples for interpersonal conflict and intragroup conflict than for intergroup conflict and interorganisational conflict. 2.5 Sources of Conflict THINK POINT Think about the conflict which you have experienced or observed within organisations. What do you think was the source of the conflict? Comment on Think Point Figure 4 below summarises the sources of conflict. Goal Incompatibility Structural Design Sources of Conflict Degenerative Climate Personal Differences Different Role Expectations Figure 4: Sources of Organisational Conflict MANCOSA- BBA Year 3 26

27 2.5.1 Goal Incompatibility Goal incompatibility is a source of conflict and can result due to: Mutually Exclusive Goals where the achievement of one party s goal is viewed as threatening to the achievement of another party s goal. An example would be the goal of a company s credit department wanting to limit sales to people who are able to pay cash versus the sales department s goal which would be to increase the volume of sales and market share (Cook & Hunsaker, 2001). Insufficient Shared Resources where an organisation has a limited number of resources (money, personnel and equipment) to distribute across the departments, each of which have different goals. Different Time Orientations where the goals of different departments have different time lines. For example, the research and development department would ordinarily have goals with longer time frames than the sales department. If departments are unable to understand and acknowledge these differing time frames, dysfunctional conflict could result (Cook & Hunsaker, 2001) Structural Design In section 2.2 we saw that one of the characteristics of conflict is interdependence. Interdependence requires that parties interactions need to be appropriately managed and structured to ensure performance. In terms of structural design, the sources of conflict include: The Nature of the Interdependence, where the nature of the interdependence determines the potential for conflict: Pooled interdependence exists when two parties are independent of each other for their own performance outcomes, but each makes a contribution to the overall organisation that affects the well-being of both parties. (Cook & Hunsaker, 2001: 378). The parties therefore produce their individual outputs independently and have little if any contact with other parties. Conflict is therefore unlikely to arise from pooled interdependence. Sequential interdependence occurs when the output of one party provides necessary inputs for another to accomplish its goals. (Cook & Hunsaker, 2001: 379). This provides opportunities for conflict in that the output of one party will affect the output of another party. Reciprocal interdependence exists if the outputs of two parties are inputs for each other (Cook & Hunsaker, 2001: 379), and the potential for conflict is considerable in such situations, due to the high need for coordination, communication and joint decision making. MANCOSA- BBA Year 3 27

28 Lack of Substitutability, where the more alternative sources of needed resources and services available to a party, the greater its degree of substitutability (Cook & Hunsaker, 2001: 380). Certain organisations are prescriptive about the use of resources. For example, some organisations prescribe that services produced elsewhere in the organisation should be utilised to ensure full resource utilisation. This creates a situation where the supplying party has power over the receiving party and this can result in conflict (Cook & Hunsaker, 2001). For example, an education institution may prescribe that faculties must make use of the internal marketing department to market their programmes. This prescription provides the marketing department with power over the faculty, and can result in the marketing department not delivering according to the brief of the faculty and not meeting the time lines specified by the faculty. Power Differentials: Both interdependence and lack of substitutability impact on the power relations between two different parties, which creates the potential for conflict. For example, if party A makes certain decisions that impact on party B s ability to accomplish its goals, party A has power over party B. The more dependent party C is on receiving vital inputs from party D, the more power supplier party D has over received Party C. (Cook & Hunsaker, 2001: 380) Different Role Expectations A role is a set of tasks and behaviours that an individual or group is expected to carry out. Different role expectations are often the source of conflict, and can take the form of: Role Ambiguity, which occurs when the tasks and behaviours expected from an individual holding a particular role are not clear, as a result of vague communication about the role. Role Conflict occurs where expectations by the party holding the role are different to expectations for other parties (such as managers, fellow employees, clients, etc.) Role Overload occurs when role expectations exceed a party s ability to respond effectively (Cook & Hunsaker, 2001: 381). While role conflict is more prevalent at lower levels of the organisation, role ambiguity is more likely at higher levels. For example, the expectations of a first line supervisor will differ across employees, union representatives and middle management, thus amounting to role conflict. An example of role ambiguity would be where the board informs a new CEO that his role is to increase profits without providing him with an understanding of the relevant factors and dynamics that impact on profits within the organisation. MANCOSA- BBA Year 3 28

29 2.5.4 Degenerative Climate A degenerative climate is one which encourages dysfunctional conflict and where win-lose attitudes are prevalent (Cook & Hunsaker, 2001). Degenerative climates usually result when there is a clash between values and expectations of individuals or groups. For example, an accounting department may decide to flaunt its power by informing higher level management of all expense-account errors and publicising the names of managers who violated established procedures (Cook & Hunsaker, 2001). There is also a danger of a degenerative climate resulting after a merger or acquisition. For example, the culture clash between two merged companies may result in different behaviours from both parties which could lead to irritation and resentment towards employees from the different party Personal Differences We have a natural affinity with certain people and an immediate dislike of others. Personal differences often lead to conflict due to contrasts in values, behaviours and perspectives (Kreitner & Kinicki, 2001) MANCOSA- BBA Year 3 29

30 ACTIVITY Read the following case study and then answer the question which follows: Sohan recently joined Medical Caring, a medical aid company. He has been appointed as a Team Leader within the call centre. After two weeks of work, Sohan is irritated and angry. He feels overly stretched in all directions. The call centre agents seem to think that Sohan is there to educate them on how to use the new call centre system. The customers that call in often refuse to speak to the call centre agents and want to speak to Sohan who they believe is there to solve their problems. Middle management is constantly asking Sohan for statistical reports on the call centre s performance and seems to think that Sohan has nothing to do all day but prepare these reports. To make matters worse, Sohan has had a run in with one of his fellow team leaders, Jason. While Sohan gets along with many people, Jason is one of those people who press Sohan s buttons and easily irritate him. Jason sits in the cubicle next to Sohan and likes to listen to Kwaito music. At 3pm today, Sohan was so irritated by the Kwaito music which Jason had been playing the whole day that he asked Jason to turn it off for an hour. Jason refused, saying that the music helped him think. This was the last straw for Sohan who stormed off to the canteen in an attempt to cool off. Discuss Sohan s sources of conflict: MANCOSA- BBA Year 3 30

31 Comment on Activity Sohan is experiencing conflict from two key sources: Different role expectations: Sohan is experiencing role conflict in that customers, call centre agents and management have different understandings of Sohan s role and therefore make different demands on him. Furthermore, it appears that Sohan is suffering from role overload in that he does not seem to be responding effectively to all the demands placed on him. Personal differences: the personal differences between Jason and Sohan are a further source of conflict. 2.6 Outcomes of Conflict THINK POINT Think about the conflict which you have experienced or observed within organisations. What has been the outcome of the conflict? Comment on Think Point Sections and below outline the outcomes of functional and dysfunctional conflict Functional Conflict Functional conflict has positive results for an organisation in that it stimulates innovation and production. The benefits which can result from functional conflict include: Managers and employees become more aware of problems and are more able to cope with problems as a result of discussing existing and potential conflicts Organisational practices are challenged and improved. Relationships between team, department and / or organisational members are strengthened as a result of releasing the tension and achieving a win-win solution Personal development occurs as individuals learn about how they handle conflict Conflict can stimulate fun as managers and staff engage in solving interesting problems (Cook & Hunsaker, 2001) MANCOSA- BBA Year 3 31

32 Intragroup Benefits The benefits of functional conflict are most visible within teams who experience: o Increased cohesiveness o Increased loyalty o In crisis situations, acceptance of autocratic leadership o Emphasis on task accomplishment (Cook & Hunsaker, 2001) Intergroup Benefits Positive outcomes of functional conflict between teams / groups include: o Increased problem awareness o A decline in tensions between groups after resolution of conflict o Appropriate readjustment and realignment of tasks o Establishing means to facilitate feedback on intergroup problems o Clarification of priorities and tasks for respective teams (Cook & Hunsaker, 2001) Dysfunctional Conflict The outcome of dysfunctional conflict ultimately hinders the achievement of the organisation s goals. Intergroup Problems Common intergroup consequences of dysfunctional conflict include: o Hostility between groups and the establishment of an us-and-them mentality o Distorted perceptions which emphasise the negative traits of a particular group o Negative stereotyping which results in decreased communication which is also distorted o Decreased communication as a result of the distorted perceptions and negative stereotyping (Cook & Hunsaker, 2001) MANCOSA- BBA Year 3 32

33 Intragroup Problems Common consequences of dysfunctional conflict within a group include: o Lack of trust o Decline in cooperation o Decreased communication o Decreased cohesion o Decline in productivity (Cook & Hunsaker, 2001) 2.7 Conflict Management Styles Figure 5 below provides an overview of the various conflict management styles: Conflict Management Styles Assertive Competing Collaborating Compromising Avoiding Accommodating Unassertive Uncooperative Cooperative Figure 5: Conflict Management Styles (K. Thomas cited in Robbins, 2001) MANCOSA- BBA Year 3 33

34 Competing Style This style is assertive and uncooperative, and is evident where an individual or group seeks to satisfy their own interests without regard for others (Robbins, 2001). A competing style is beneficial where quick decision and action is imperative, such as in an emergency. Collaborating Style This style is assertive and cooperative. Parties to a conflict seek a mutually beneficial outcome through cooperation (Robbins, 2001). A collaborating style, however, takes time as it involves gaining a good understanding of the other parties needs, incorporating their concerns and working through hard feelings to achieve an optimal solution (Cook & Hunsaker, 2001). Given the time that the collaborating style requires, it should not be utilised to address trivial problems. Avoiding Style This style is unassertive and uncooperative (Robbins, 2001). People who adopt this style do not pursue the goals of the other party, nor do they pursue their own. It involves recognising that conflict exists, but instead of seeking to address it, attempts are made to ignore or suppress the conflict. Examples include ignoring a conflict (pretending it isn t there) and avoiding individuals and groups with whom you disagree. The avoiding style is most appropriate when a conflict is not really of relevance to you (Cook & Hunsaker, 2001). Accommodating Style This style is unassertive and cooperative. People who adopt this style seek to put the other parties interest over their own (Robbins, 2001). This style is appropriate when the issues at stake are of much greater importance to the other party. The benefit of this style is that it facilitates the maintenance of good relationships (Cook & Hunsaker, 2001). Compromising Style This style falls between assertive and cooperative behaviours. People who demonstrate a compromising style are prepared to give something up in the interests of reaching a comprised outcome (Robbins, 2001). An example of compromising is accepting a raise of R2 per hour rather than R4 per hour. MANCOSA- BBA Year 3 34

35 ACTIVITY Of the five conflict management styles, which is the best? Provide a reason for your answer. Comment on the Activity There is no best conflict management style. The choice of conflict management style depends wholly on the nature of the conflict situation. For example, adopting an avoiding style would be appropriate when the issue of conflict is relatively unimportant to you, while adopting a competing style is appropriate in situations that require quick decision making. MANCOSA- BBA Year 3 35

36 2.8 Strategies for the Management of Conflict Strategies for Avoiding Intergroup Conflict Strategies for Reducing Dysfunctional Conflict Rules and Procedures Superordinate Goals Hierarchy Increased Communication Planning Problem Solving Liaison Roles Task Forces Expansion of Resources Third-Party Judgement Teams Integrating Departments Changing Organisational Structure Avoidance Figure 6: Strategies for Conflict Management The management of conflict is essential. Conflict management strategies can be employed to ensure that functional conflict results in stimulation, innovation and improvement. Conflict management strategies are also necessary to ensure that dysfunctional conflict is checked and that its potential destructive consequences are not achieved. Figure 6 provides an overview of strategies for managing conflict. MANCOSA- BBA Year 3 36

37 2.8.1 Strategies for Avoiding Intergroup Conflict Intergroup conflict often results from a lack of coordination. Strategies can be employed to effectively coordinate intergroup performance and in so doing avoid dysfunctional conflict. These strategies are: Rules and Procedures Expected performance, behaviour and processes need to be written down. These will provide guidance as to how to act and what takes precedence in specific situations, and in so doing will ultimately reduce intergroup conflict (Cook & Hunsaker, 2001). Hierarchy If conflict within a group or between groups cannot be addressed through rules and procedures, it can be escalated to the next level of the hierarchy. Planning Within complex situations, rules, procedure and hierarchy are insufficient for the avoidance of potential conflict and planning is required. Through planning all groups will know what is required of them at which stage of the project (Cook & Hunsaker, 2001). Liaison Roles In complex situations, staff should be contracted to perform liaison roles. Such liaison staff promote lateral communication between groups and in so doing avoid potential dysfunctional conflict (Cook & Hunsaker, 2001). Task Forces In addition to utilising planning and liaison roles to avoid conflict in complex situations, task forces can be implemented. Task forces comprise representatives from the various groups involved in a project. Their focus is to facilitate communication between groups and to investigate problems and come up with solutions (Cook & Hunsaker, 2001). Teams While a task force is relevant to a complex situation extending over a relatively short period of time, teams are relevant to complex situations extending over a long period of time. Cross-functional teams, where members of particular departments / functions are represented, are most effective in facilitating coordination between departments / functions as well as providing for knowledge sharing and communication. MANCOSA- BBA Year 3 37

38 Integrating Departments When the situation is so complex that planning, liaison roles, task forces and permanent teams are not sufficient, an integrating department would need to be established. An integrating department is a permanent department with full time staff whose responsibility is coordinating the work of all departments / groups. This is an expensive initiative, and therefore the setting up of an integrating department must be warranted by the need for non-routine problem solving, conflicting goals between groups and the need for a lot of ongoing cooperation between groups (Cook & Hunsaker, 2001) Strategies for Reducing Dysfunctional Conflict While section focused on strategies for the avoidance of intergroup conflict, it is also important that recurring dysfunctional conflict is confronted (rather than avoided). Dysfunctional conflict can be confronted by utilising the strategies of focusing on superordinate goals, increasing communication, problem solving, expanding resources, third party judgment, changing the organisational structure and avoidance. Superordinate Goals One of the most effective ways to reduce conflict is to determine an overriding goal that requires the cooperative effort of both conflicting parties such a goal must be unattainable by either party alone and of sufficient importance to supersede all their other goals (Cook & Hunsaker, 2001: 399). Examples of superordinate goals include increasing responsiveness to customers, increasing organisational effectiveness and gaining competitive advantage (Jones & George, 2003). Superordinate goals ultimately eliminate win-lose situations in that parties seek to cooperate in the interest of attaining the superordinate goal. Increased Communication Increasing communication provides a means to address and correct misunderstandings, diminish the prevalence of negative stereotypes and ultimately provide for the development of positive feelings amongst parties (Cook & Hunsaker, 2001) Problem Solving Problem solving is a formal means of bringing conflicting parties together to discuss their differences and craft a way forward. It is a time consuming process, but can be very effective (Cook & Hunsaker, 2001). MANCOSA- BBA Year 3 38

39 Expansion of Resources Scarce resources are frequently the source of conflict within organisations. To address this, where possible, organisations should expand the available resources. This will ultimately lead to less dysfunctional conflict which in turn will provide for greater productivity and return on investment (Cook & Hunsaker, 2001). Third Party Judgement A less time consuming and less expensive approach to managing conflict than the problem solving strategy is the strategy of third party judgement. Here a third party, such as a common boss, serves as a mediator to resolve a conflict (Cook & Hunsaker, 2001). This approach is also known as a conflict triangle (Kreitner & Kinicki, 2001). Changing Organisational Structure Conflict could be a signal that the organisation s structure needs to be changed, bringing about new organisation to tasks and groupings of staff as well as new levels of integration (Jones & George, 2003). Cook & Hunsaker (2001) identify that scarce resources, power imbalances and status differences indicate the need for a change in organisational structure. Avoidance At times conflicting parties can ignore the dysfunctional situation in the hope that the conflict will resolve itself. However, it is seldom that dysfunctional conflict disappears and it frequently escalates with time. It may be appropriate however, in certain dysfunctional situations, to employ an avoidance strategy by separating conflicting groups temporarily or limiting the amount of interaction between them (Cook & Hunsaker, 2001). 2.9 Summary This section focused on Managing Conflict. Definitions of conflict were explored, and the difference between functional and dysfunctional conflict was highlighted. The types of conflict were examined, as were the sources of conflict. Outcomes or consequences of conflict were explored and the various conflict management styles were unpacked. In concluding this section, various strategies to managing conflict were examined. The next section, Section 3 will focus on Business Ethics. MANCOSA- BBA Year 3 39

40 SELF CHECK ACTIVITY Now that you have completed this section on Managing Conflict, check your understanding by completing the multiple choice questions below: 1. Conflict tends to be prevalent within organisations due to: A. Ongoing change and transformation B. Greater workforce diversity C. A decrease of face-to-face communication D. All of the above 2. Jerry Abell, CEO of Architecture Inc is puzzled. The latest financial results show that the company s performance is deteriorating. In fact, profitability has dropped by 30% since this time last year. Jerry cannot understand why as, in comparison to last year, there has been very little disagreement and conflict in the company this year. Staff and managers have thought along the same lines and have easily reached agreement on designs and courses of action. If conflict has been limited, why has the company not been performing well? The situation at Architecture Inc proves that: A. Conflict needs to be limited in order for an organisation to perform well B. Conflict has no impact on organisational performance C. An optimal level of conflict is required for organisational performance D. None of the above 3. Functional conflict within organisations is necessary to: A. Prevent people and organisations from becoming complacent B. Stimulate creative problem solving and innovation C. Improve organisational practices D. All of the above MANCOSA- BBA Year 3 40

41 4. Jabu is angry. He is part of a cross-functional team at Sports Inc which is a company which manufactures sports clothing. He has just come out of a team meeting where the use of the advertising budget was furiously debated. Jabu and a couple of other team members strongly believe that the advertising budget should be spent on a radio campaign. However, other team members feel strongly that the advertising budget should be used for billboard adverts as well as adverts to be placed on buses and taxis. The team meeting concluded without this matter being resolved. This is an example of: A. Interpersonal conflict B. Intragroup conflict C. Intergroup conflict D. Inter-organisational conflict 5. Zanele works at Millennium Trucks, a company which manufactures trucks. Zanele was originally working for Trucks For You, which merged with Trucking Inc three weeks ago to form Millennium Trucks. The merger has been difficult due to the clash of two different organisational cultures. Zanele is furious as she has just dealt with a representative (previously from Trucking Inc) from the manufacturing department who was flippant and refused to address her query. This type of behaviour is quite different from the behaviour which she experienced at Trucks For You where there was a climate which promoted interdepartmental support. This is an example of the following source of conflict: A. Goal incompatibility B. Structural design C. Degenerative Climate D. None of the above MANCOSA- BBA Year 3 41

42 6. Intragroup benefits of functional conflict include: A. Increased loyalty B. Increased cohesiveness C. Emphasis on task completion D. All of the above 7. Vusi and Eric, two IT Engineers from the IT department at Cellular Future are frustrated with the lack of progress made on a project on which they are working together with the Marketing Department. Don t you think the marketing department is useless, Vusi? questions Eric. I mean, what have they actually contributed to this project? he continues. Yes, they sure are useless, responds Vusi. The entire department is just a bunch of airhead women who are paid large sums of money to look pretty. What value did they think they could add to this project? Vusi s comment is an example of: A. Hostility that results from dysfunctional intergroup conflict B. Decreased communication that results from dysfunctional intergroup conflict. C. Negative stereotyping that results from dysfunctional intergroup conflict. D. None of the above MANCOSA- BBA Year 3 42

43 8. Andile and Rebecca are two managers who have been tasked to improve customer service within Hawk Insurance. Andile and Rebecca have both come up with very different approaches to the improvement of customer service. Both of them, however, believe that their respective solution is the best and each of them refuses to accept the other s proposal. This is an example of a / an management style. A. Avoiding B. Accommodating C. Compromising D. Competing 9. As Rebecca and Andile have reached a deadlock, they decide to call in their manager to resolve the conflict. This is an example of : A. A third party judgement B. A conflict triangle C. Both A and B D. Neither A nor B 10. Which of the following intergroup conflict management strategies is the most expensive, but is appropriate for complex situations which extend over long periods of time? A. Integrating departments B. Task force C. Planning D. Rules and procedures MANCOSA- BBA Year 3 43

44 11. As a means to reduce dysfunctional conflict between the Sales Department and the Manufacturing Department, the managers of these departments have decided to focus on increasing responsiveness to customers to guide their work, interdependence and interaction. Increasing responsiveness to customers is an example of a: A. Value B. Problem solving approach C. Superordinate goal D. Stereotype 12. Which of the following is not a strategy for reducing dysfunctional conflict? A. distorted perceptions B. avoidance C. enhanced resources D. None of the above Answers to Self-Check Questions 1. D 2. C 3. D 4. B 5. C 6. D 7. C 8. D 9. C 10. A 11. C 12. A MANCOSA- BBA Year 3 44

45 SECTION 3 BUSINESS ETHICS MANCOSA- BBA Year 3 45

46 LEARNING OUTCOMES The overall outcome for this section is that, on its completion, the learner should be able to demonstrate an understanding of business ethics within organisations. This overall outcome will be achieved through the learner s mastery of the following specific outcomes, in that the learner will be able to: 1. Define ethics 2. Discuss the importance of ethics within the field of business. 3. Discuss the identification and the resolution of ethical dilemmas. 4. Compare, contrast and apply the ethical models of utilitarianism, moral rights and justice. 5. Discuss how to improve an organisation s ethical climate. 6. Discuss the impact of gender on ethical practice. MANCOSA- BBA Year 3 46

47 READING Prescribed Reading: Hellriegel, D., Jackson, S.E., Slocum, J., Staude, G., Amos, T., Klopper, H.B., Louw, L. & Oosthuizen, T. (2011) Management. Third South African Edition. Cape Town: Oxford University Press. pp Nieman, G. (Ed) & Bennett, A. (Ed) (2006) Business Management. A Value Chain Approach. 2 nd Ed. Pretoria: Van Schaik Publishers. pp Recommended Reading: Books Cook, C.W. & Hunsaker, P.L. (2001) Management and Organisational Behaviour. Third Edition. New York: McGraw-Hill Irwin. pp Jones, G.R. & George, J.M. (2003) Contemporary Management. Third Edition. Boston: McGraw Hill. pp Kreitner, R. & Kinicki, A. (2001) Organisational Behaviour. Fifth Edition. New York: McGraw-Hill Irwin. pp Journals Dawson, L.M. (1995) Women and Men, Morality and Ethics. Business Horizons. July / August, pp MANCOSA- BBA Year 3 47

48 3.1 Introduction Constant change and limited resources, together with demands for high performance, all place considerable pressure on managers and employees today. This pressurized environment could potentially result in managers and employees engaging in behaviour which could be construed as unethical. Ethics is therefore receiving more and more attention in business today. This section explores Business Ethics through addressing the following areas: What are ethics? The importance of ethics in business Resolving ethical dilemmas Ethical models How to improve an organisation s ethical climate Gender and Ethics 3.2 What are Ethics? THINK POINT Based on your experience of ethics in the workplace and outside of the workplace, how would you define the term ethics? MANCOSA- BBA Year 3 48

49 Comment on Think Point Various definitions of ethics are provided below: Ethics are moral principles or beliefs about what is right and wrong. These beliefs guide individuals in their dealings with other individuals and groups (stakeholders) and provide a basis for deciding whether behaviour is right and proper (Jones & George, 2003: 89). Ethics is the study of moral issues and choices. It is concerned with right versus wrong, good versus bad, and the many shades of gray in supposedly black-and-white issues (Kreitner & Kinicki, 2001: 91). Ethics can be defined as the code of moral principles and values that directs the behaviour of an individual in terms of what is right and wrong. Ethics sets standards about what is good or bad in behaviour and decision making (Smit & Cronje, 1997:490). In the most elementary sense, ethics is a set of values and rules that define right and wrong behaviour. These values and rules indicate when behaviour is acceptable and when it is unacceptable (Hellriegel, et al 2011: 108). Management (business) ethics can be regarded as the discipline that occupies itself with the behavioural rules and values of society while pursuing the objectives of the business. Management ethics consequently takes into account all the stakeholders and means applied in the business (Nieman & Bennett, 2006: 318). Ethics are related to morality. While morality distinguishes between right and wrong, ethics are the guidelines as to how morality is achieved (Nieman and Bennett, 2006). Morality (i.e. what is right or wrong) is determined by the community or society in which a business operates. Therefore, different communities and societies will have different beliefs as to what is right and wrong. Ethics are therefore relative to the morals of a particular society. For example, in Spain abortion is regarded to be wrong and is therefore prohibited, while in Japan, abortion is considered to be acceptable and is frequently utilised as a means of birth control (Nieman and Bennett, 2006). MANCOSA- BBA Year 3 49

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