Mar 14, 2020 in Analysis
Case Description of a Conflict

A social production conflict is an integral part of the whole economic activity of subjects, the questions of its description and studying in the context of the developing market conditions are essential. The solution of these issues dictates the relevance of the theoretical and practical development in the field of the conflict management. The given essay discusses a real life conflict, occurred in one of the touristic agencies called “Eco Holiday” as well as the conflictogenic and conflict eliminating factors.

Description of the Conflict Event

“Eco Holiday” is an enterprise structure that specializes in the development and sale of the main tourist services - group and individual tours, insurance, aftersales services, etc. Since the given essay will discuss the conflict between the board chairman and his deputy director, it is necessary to give the significant general ideas about the JSC structure, its management, and relations with subordinates. Moreover, for the better understanding of the essence of the conflict, it is helpful to briefly characterize the main characters, to reveal the conflictogenic and conflict eliminating tendencies which define the cause of the described conflict.

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The creation of Joint Stock Company (JSC) is carried out on a voluntary basis. The shareholders contribute their shares in the view of money or any other property having the money equivalent. The cumulative property is called “authorized capital.” The shares are issued for the whole sum of the authorized capital actions, distributed between the founders according to the contributed share. The major decisions are made when owners of more than 50% of shares accept them.

In the case of commission of actions not compliable with the ideas of shareholders by the chairman, the shareholders’ council is competent to raise a question of the unscheduled re-elections of a chairman. In the current conflict case, both the chairman and his deputy director were the shareholders of “Eco Holiday, JSC”. However, they owned the insignificant number of shares. The deputy director was invited by the chairman, at the same time remaining the head of the other commercial organization. The above-mentioned information shows that both the chairman and his deputy director held the leading positions in the company only because they suited the majority of shareholders.

Describing the essence of the conflict and the psychological characteristics of its participants, the given essay will touch only their general description due to the ethical considerations. The relevant information was received on the basis of the included observation, confidential conversations, analysis of documents, the psychological analysis of activity, application of some experimental methods of research, etc.

Both the chairman and his deputy director are 40-years old, well-educated and experienced males. They have been the closest friends for more than 20 years, entered a solid informal group of the former fellow students. They both made a huge contribution to the creation and adjustment of work in the “Eco Holiday, JSC”. Both are purposeful, rationalistic, good organizers, and practical psychologists. They could easily understand other people and were able to use their strengths. Besides, they were subjectively honest and fair.

Moreover, they adequately accepted the critics towards them. Both of them were neither sensitive nor conflict people. In the case of disagreements, they were able to find a way out of the situations demanding the reciprocal concessions, being guided by the achievement of goals. Thus, the impulsive behavior was not their peculiar feature.

Our Process

Both the chairman and his deputy director were interested in the preservation of the high posts in the administrative hierarchy. They understood the dependence of own statuses on shareholders, accurately realized the need for the unification of the actions on the issue. However, there were also differences in their management style. When making the crucial decisions, the chairman was guided by the minimization of the negative outcomes. Being more inclined to a risk, his deputy director was aimed at the reception of the maximum results. Thus, neither strategic objectives nor motives of their activity, nor the system of the developed relationship, nor personal characteristics were not the direct causes of the conflict which began absolutely unexpectedly for me as an observer on the shareholder’s general meeting, whose agenda included the approval of the annual report on the activity of “Eco Holiday.”

The agenda and the contents of the report were agreed with the shareholders and were approved by them. It is necessary to note that both the chairman and the deputy were the most interested people in the shareholders’ meeting, as they wanted the meeting to process smoothly, because, in this case, the shareholders would indirectly approve the existing situation in the company.

At the shareholder’s general meeting, the chairman declared the dividends’ interest rates. This issue was previously discussed, and its general points were approved. However, the deputy director suddenly brought up the question about the necessity to expand the board, motivating it by the idea that the expanded board would achieve better results.

Due to the fact that this question was not included into the agenda, the chairman declined it. Later, the deputy director suggested to re-elect chairman. However, this proposal was also declined. The heated atmosphere of the shareholder’s general meeting became the basis for the deputy, and several shareholders left the boardroom, thus shocking everybody present in the meeting. The group, which left the meeting, held its own meeting, separate from the main meeting of the shareholders. The deputy director elected a new chairman. Besides, they approved the fact that the meeting of shareholders was illegal and invalid.

Owning to the new situation, stating the illegal position of the company, the conflict was investigated by the legal company, rendering the juridical services to “Eco Holiday.” It offered the solution of the conflict situation by the unscheduled shareholder’s meeting, which will put an end to the developed diarchy. The new unscheduled meeting of shareholders showed that more than 97% of votes were given to the chairman. The results of the meeting put an end to the conflict, approving the power of the chairman.

In addition, the specifics of the financial relations is of great importance for the understanding of the conflict situation in the company. Making a big contribution to the reception of profit and understanding that the main profit share is taken by the company’s shareholders, the majority of the hired workers considered the remuneration for their work to be unfair. The dissatisfaction with the current situation led to the emergence of the informal structures with sharply different systems of group norms and values in relation to the norms and values of the organization in general. It resulted in the politicization of the relations between employees.

Having analyzed the human resources in the company, I came to the conclusion that more than a half of the workers of the main structural departments were not satisfied with the current juncture in the company. It is also proved by a high labor turnover. Moreover, there is also some voluntary discharges. For the discussed conflict case, it is important to state that two new employees were hired more than a half year ago. They were the colleagues of the deputy director from the previous work. At the same time, they were his close friends. Trying to strengthen own positions in the company and the inter-organizational struggle, these colleagues started to pull the deputy director. As a result, they succeeded.

The conflictogenic situation, caused by the incorrect solution of the HR problems always took place in the system of relations in “Eco Holidays.” The majority of the company’s staff was included into various informal groups confronting each other, and both the chairman and the deputy director suddenly appeared in different of them. The deputy director, partly keeping the informal relations with the chairman, and, thus, entering into two opposite informal groups, was in the condition as if of a pendular rocking. Such a state led to the situation when the insignificant disagreements between the chairman and the deputy director artificially amplified in the relevant informal group to the nearly full ignoring of the opinion of the deputy director by the chairman.

The Reasons for Conflict

Having considered the conflict case in “Eco Holiday,” it is possible to single out the following factors, which contributed to the conflict, the so-called “conflictogenic factors”:

  • The pressure of informal group on the deputy director. This factor is less evident than the others, but nevertheless obvious for the included observer;
  • The deputy’s feeling of some underestimation of both intellectual potential and personal qualities from the side of the chairman;
  • The aspiration of the deputy director to the self-affirmation in the questions which do not have a basic strategic importance. This factor was the most evident one, contributing to the conflict.

Among the conflict eliminating factors, there is the presence of common strategic goals from both sides; for example, understanding of the necessity of the actions unification towards the shareholders for the preservation of the top managing positions by both conflicting sides, long-term friendly relations, the personal features of participants and the ability of the conflict participants to find the way out from the difficult situation. Moreover, it is essential to note that neither of the conflicted parties considered a conflict as the means in the achievement of goals.

It is obvious that neither the concept of motivation nor the cognitive concept of the explanation of the reasons of the conflict emergence cannot be used in this case. The first one cannot be used owning to the fact that the conflict eliminating factors are immeasurably more powerful in comparison with the conflictogenic factors. The second one says that the parties did not have any conscious purposes for the conflict situation.

Our Benefits

The Factors of Conflict Resolution

Thus, the conflict event in “Eco Holiday” can have several solutions. The first possible solution states the complete termination of the confrontation and mutual reconciliation of the parties or achievement of a compromise – a partial satisfaction of the claims of both parties and reciprocal concessions. The second one includes the resolution of business conflict: by the satisfaction of the objective requirements, claims of the parties or by the exposure of the insolvency of the made claim, or punishment of the conflict participants. The third possible solution includes the mechanical termination of the conflict by means of the dismissal of one of the conflict participants, the shifts of the conflict parties to the different divisions of this company.

 

To sum up, on the one hand, conflicts destroy the social structures and lead to the considerable unreasonable expenses of resources. On the other hand, conflicts compose the mechanism which promotes the solution of many problems, unites the groups and eventually serves one of the ways of achievement of social justice. The duality in the assessment of the consequences of the conflict led to the fact that the sociologists engaged in the theory of the conflicts did not come to the general point of view concerning the usefulness or harmfulness of conflicts.

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