Conflict in an organizational setting is inevitable, not least because of the inherent power differences. These differences are emphasized by the variety in opinions, cultures, traditions, religions and individual motivations among others. With the frequent changes in the business environment, changes within and without the organization are necessary, if the firm is to succeed or even remain competitive. This paper asserts that poor preparation, execution or failure of change causes conflict or exacerbates the potential of conflict within an organization. The paper draws on the efforts of Ritz Advertising to change in line with the business environment, which brings to the surface the inherent conflict sources that subsequently breed dysfunctional behaviour. It illustrates the influences of this dysfunction on the firm’s bottom-line, as well as its prospects for future viability in the face of increasingly strong competition.
Organizational Change at Ritz Advertising
Ritz Advertising is mid-sized marketing and advertising agency, which specializes in the creation as well as production of short, simple TV commercials, and after twelve years of successful operations, it has suffered stiffening competition from internet-based companies, which enjoyed the ability to provide clients with a chance to create their own commercials, which were subsequently produced at a low costs. Ritz’s market has been rapidly declining, not least because it traditionally catered for small firms, which have expanded. In order counter this, the company changed its strategic direction to produce longer, sophisticated commercials, which took longer, without adjustments to the time allocations (Robbins, 2003). The company has separate departments, which participate at different stages of the production, but every department has strict cost, time and output targets to be met. The departments included the accounts department, charged with sourcing, administration and marketing; the creative department that creates advertising/commercial concepts, and the production department, which films and finishes off the ads for television (Balthazard, Cooke, & Porter, 2009).
The changes cut budgets, and increased the workload for the creative and production departments, with strict targets that the creative department could not cope (Robbins, 2003). In order to meet its targets, the production department has always been hurrying projects from the creative department that affects quality, and has often sparked up conflict between the department heads. While the production department has been meeting its production targets, the low customer satisfaction affects the creative department targets, which struggles with low staff, long working hours and employee dissatisfaction. In addition, the creative department employees feels the production department is ill-equipped and under-staffed to produced quality adverts, besides the fact that the budget cuts have cut back on employee training and development, which has embittered the staff against the senior management. Inter-departmental conflicts and conflicts among the departmental heads have become rife, and cooperation among departments has declined, including at the departmental meetings (Siddiqui, 2005). The root of the conflict derives from the failure to change the performance appraisal and reward system, which also failed to link performance to rewards. The system used by the firm worked well before the changes, but remained unchanged following the change in the strategic direction of the firm.
The firm set high targets for the departments, without such targets on individual employees. In addition, while the system set individual cost, quality, time and output targets for individual departments, the targets were not related as they should, since every department’s output goes on to be the input for another department, and thus quality or output level failures reflect on or the subsequent departments (Aamodt, 2009). Owing to the production department’s continued push for more and more quantity, as against quality, customer satisfaction ratings for the company have plummeted, worsened by the cuts in marketing budgets that is contributing to even poorer customer experience.
While it is unlikely that department heads would take personal responsibility for their department’s performance, the appraisal system extends generous bonuses to the heads if the targets are met, with not such rewards for the rest of the employees (Balthazard, Cooke, & Porter, 2009). This has in turn motivated departmental heads to seek to get bonuses whichever way it is possible, even if it takes forcing the creative department for projects before they are completed, if this means the production department meets its output targets. This has bred considerable resentment among the junior employees, who are the ones actually shouldering the biggest burden of the increased workloads and shorter deadlines. The further failure of the system has resulted from the fact that the targets for the individual departments are usually set without consideration to the resources that are available at Ritz Advertising. The new commercials are long, sophisticated and involving, but the company has not invested in new, state-of-the-art equipment, employee training or new staff recruitment (Aamodt, 2009). The consequence has been employee frustration, poor job satisfaction, low motivation, resentment, poor teamwork, conflict and a host of other dysfunctional behaviour at Ritz Advertising.
While conflict is bound to happen in a firm, there are many elements of conflict or its causes that can be easily prevented by a firm, and the dysfunctional performance appraisal and reward system at Ritz Advertising is a perfect example. It is evident that the performance appraisal and rewards system serves an important role in fostering performance, a positive organizational culture and functional organizations (Aamodt, 2009). However, in order to accomplish this, the system must have three important elements, which would make it avert creating bottlenecks and conflicts, while at once fostering performance. The system must be able to measure performance, by firstly setting attainable goals throughout the firm, then assess them. Further, the system must motivate the members of the organization, by providing necessary incentives to push them to reach set goals. In order to accomplish this, the system must have a meaningful reward system, as against the case at Ritz Advertising, the reward system must be carefully linked to the set targets (Siddiqui, 2005).
The targets must be realistic, and set in full realization of the resources available to the firm, including financial and human capital, time and equipment, and can be set in terms of accounting objectives (current and quick ratios, cash flow and working capital etc); economic indicators such as the sales, stock prices and profit growths. Ritz Advertising has set several goals including the total costs per client, costs/commercial produced and the average costs/storyboard, but these failed to consider the available resources, which has effectively seen the emergence of bottlenecks. The appraisal system should subsequently serve as a control mechanism, by which the firm management uses to channel resources towards the attainment of set targets and capacity building and crucially, developing a clear roles and responsibilities for departments and individual employees, in order to avoid conflicts such as Ritz production department hurrying projects from the creative department (Balthazard, Cooke, & Porter, 2009). This has failed at Ritz Advertising. Ideally, it should include human resources development, capital acquisition and proper supervision, which has instead resulted in conflicts, frustration and dissatisfaction.
The appraisal and reward system is crucial in averting conflict and dysfunctional behaviour by providing motivational and directional influence on the organization. It serves a framework to push the targets by setting targets and providing incentives to lead the members towards attaining them (Siddiqui, 2005). Further, the targets help the organizational members to strive to attain higher goals. Without a proper system of incentives, and the link of incentives to the targets, the lack of motivation, job dissatisfaction etc can lead to the emergence of dysfunction, with the consequential influence on performance.
The potential of the performance appraisal and reward system in influencing functionalism, positive organizational behaviour and performance is emphatic at Ritz Advertising, and so is its potential for conflict. Failure occurs because of setting high goals, while at once creating bottlenecks to reaching those goals, which when coupled with unbalanced power structures, inadequate resources and poor distribution, low motivation among other factors, conflict results. Ritz Advertising’s change of its strategic direction can still succeed, but in order to do so, there must be changes across the firm, with an emphasis on capacity-building, as against blind setting of targets.
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