Organizational Behavior Theories in Business Management

Executive Summary

Most of the managers in an organization are faced with conflicts in some form or the other. They become very critical if kept unresolved or overlooked over longer time horizons. Confronting conflicts has its risks. If not managed properly, it can lead to damage to mutual respect, alignment, engagement, and trust. On the contrary, conflicts can be managed to construct win-win outcomes. The given case study presents a scenario wherein the continuance of the organization has been called into question. The aim is to link the theories of Organizational Behaviour to contextual aspects. The study considers different alternatives of tackling the given scenario and then recommends an approach to the Manager which can comprehensively resolve the issues thereby carving a path for inclusive growth.


In this fast-paced, dynamic, and demanding business scenario, companies are becoming increasingly diverse with a large number of functionalities – therefore, the potential for disagreements. “Typically, managers spend at least 24% of their time managing conflict, according to a survey by the American Management Association.”

(Kohlrieser 2007). According to Roloff (1987), “organizational conflict occurs when members engage in activities that are incompatible with those of colleagues within their network, member of other collectivities, or unaffiliated individuals who utilize the services or products of the organization.” (Rahim 2002).

The case study focuses on the isolation of the business units of an organization and the resulting conflict between them.


WW started with a proposal – a multi-sport center can bring great improvement to the State of Melbourne aims to serve the elite class and attract the best national and international sports teams. WW team includes 44 staff, divided across 5 business units: Sports science and Physiotherapy, residential accommodation, food and beverages, Health Spa, fitness and sports center, swim center, sales, marketing, membership, and administration.

Sales, marketing, membership, and administration were the central department and the other four were run by independent service providers. WW lost control over services offered by the individual units due to independent management provided to these units leading to isolation and became breeding grounds for conflicts of interest raising a question on the existence of WW. The manager of WW faces the challenge of effectively managing and steering the organization towards a sustainable growth model.


To present an approach to WW for drafting out a roadmap to resolve the conflict scenario, using this situation to build a strong organizational culture that can bring all the business units of Workout World into coordination with one another.


To analyze and find out the potential problems faced by WW, thereby suggesting a long-lasting and effective mechanism to control, manage and avoid re-occurrences.

Summary of the Three Articles

Toward a theory of Managing Organisational conflict; by M. Afzulur Rahim

“Rahim in his study states that moderate level of substantive conflict proves helpful; it stimulates discussions and debates resulting in high performance leading to organizational effectiveness.” (Rahim 2002). Diagnosis and intervention in various levels such as the interpersonal, intra-group, and intergroup conflict by the strategies are key ingredients of managing conflict. The paper emphasizes the management of conflict through structured interventions to enhance organizational learning and effectiveness.

Six essential skills for managing conflict; by George Kohlrieser

This article discusses the perspectives of how leaders can handle conflict constructively to improve the performances of employees. “Properly handled, it can help people to be more innovative and can create stronger bonds, build effective teams and improve performance.” (Kohlrieser 2007).

Kohlrieser discusses the six essential skills required by a leader to handle conflict tactically. He discusses the essentiality of bonding, dialoguing, and negotiating in conflict management.

Antecedents of Intergroup Conflict in Multifunctional Product Development Teams

A Conceptual Model; by Lisa H. Pelled and Paul S. Adler

In today’s dynamic world, multifunctional teams are becoming a progressive approach towards product development. Despite a lot of research in this area, there is a lot of ambiguity on the specific challenges faced by multifunctional product development teams. “Since the consequences associated with conflict have been well-documented, this article examines the antecedents of conflict-specifically, the processes by which functional background heterogeneity induces conflict in product development teams.” (Pelled & Adler 1994).

The paper discusses challenges faced by multifunctional product development teams arising due to intergroup conflicts.

Discussion and Evaluation of the case study


The case study opens ways to approach conflict management, one of the serious concerns in organizational behavior. There are critical problems in Workout World that are identified through observations. We see a conflict situation in the organization of WW which has resulted mainly due to multifunctional teams that are not centralized and are structured in a way that though they are task-dependent they stand as independent entities.

“The third major cause of organizational conflict is structural. Organizations are designed around product lines, regions, or technical specialties. These activities are assigned to departments that often have mutually exclusive structured interests and goals and that interact within a framework of scarce resources and task dependence.” (Bercovitch n.d).

The following are the observations in the case study of Workout World:

Dependencies of teams not streamlined

“In a conflict, the minimum of two parts, the so-called agents are in dispute about some issue. Agents can be individuals, groups, companies, states, political parties, and others (Pawlak 1998). Katz and Kahn (1978, p. 615) define conflict as some specific type of interaction, marked by obstruction struggle, constraining or prejudicial act and by resistance or retaliation against these efforts.” (Ikeda, Veludo-de-Oliveira & Campomar 2005).

Though WW was responsible for taking care of sales, membership, and administration of the brand, it had no control over the individual teams and their services. The other 4 teams which ought to be dependent on the sales and marketing team showed no coordination resulting in problems ensuring product offering and pricing strategy.

More prominence is given to departmental objectives

The independent units concentrated on establishing themselves rather than working united for the brand WW.

“Conflict occurs when individuals or groups are not obtaining what they need or want and are seeking their self-interest. Sometimes the individual is not aware of the need and unconsciously starts to act out.” (Dealing with conflict n.d.).

We find this statement in agreement with the situation in WW; one basic reason for the isolation of the business units is seeking their self-interest and going away from the perceived objective of WW. The departments were competing with each other in terms of offering their product. There was a conflict while advertising; the operators wanted their name behind their product, which dropped the goodwill of WW. The statement by Ronald J Fisher, “Conflicts can arise overvalued means or valued ends that is over how goals are achieved or what their nature or priorities are” supports this situation. (Fisher n.d).

Lack of communication and organization culture

The existing structure in the organization resulted in reduced communication between the teams. The promotional materials were not brought to the notice of Peter due to which the administration failed in answering the customers about more product info.

Jacob Bercovitch states “The main factors which serve as sources of conflict are identified as (1) communicational (conflicts arising from misunderstandings etc.), (2) structural (conflicts related to organizational roles), and (3) personal (conflicts stemming from individual differences).” (Bercovitch n.d).

The communication gap arose due to improper organizational structure and culture gives no avenues for interaction and interdependencies between the team.

No management control, reporting structure, and lack of documented organizational policies

WW had no management control over the individual operators. They were functioning as independent units which did not have any reporting structure or workflow. The operators signed a ten-year contract to operate independently. In the beginning, there was a practice of breakfast meetings, the attendance at the meeting was reduced due to a lack of strict rules and policies. Peter didn’t streamline the activities of different subunits. The irregular timing of work affected the childcare center and the cleaning and maintenance staff, resulting in the inconvenience caused to the customers.

Lack of Unity of Command

Unity of command, a principal factor in management is missing out in WW. In Fayol’s fourteen principles of administration, Unity of Command is a vital element. He strongly believed that personal dynamics and team dynamics play an important role in an “ideal” organization. “Fayol’s five principal roles (Plan, Organize, Command, Co-ordinate, and Control) of management are still actively practiced today. The concept of giving appropriate authority with responsibility is also widely commented on and is well-practiced.” (Olum 2004).

The structure of choice violates the principle of unity of command in many companies of today; the same is the case with WW.

Alternatives available for the workout World

For the management of conflict in Workout World, we can follow the below alternatives:


“Although differentiation makes the task of integration more difficult, and is likely to lead to more potential conflict in the organization, the conclusions of [research by Lawrence and Lorsch [31]-is., that the most effective organizations were differentiated but also able to achieve effective integration] suggest that it is not necessarily wise to attempt to reduce the dissimilarities in perspectives and goal orientations among the different subunits.” (Pelled & Adler 1994).

Peter needs to bring integration in the organization but still maintain the individuality of each sub-unit. This integration can be achieved using the following measures:

  • Implementing unity of command
  • Setting up of a cross-functional team
  • Setting up goals to bring shared commitments and interdependencies between teams

Compromise through collaborative negotiation

Negotiation with the teams, understanding each other’s needs is one alternative.

“it is establishing an attitude that is unconditionally constructive by using rationality in response to emotion, understanding others when they misunderstand you, consulting others even if they appear not to listen, being reliable in that you do not try to deceive, being non-coercive and not yielding to coercion, and accepting others and their concerns as worthy of consideration.” (O’Leary & Bingham 2008).

Negotiation can be position-based or interest-based. In an interest-based approach, the goal is to create a solution that will meet all party’s interest. WW responds with a better profit-sharing mechanism or a system of management representation.

Conflict resolution through authoritative leadership

Peter can play the role of an authoritative leader and bring the conflict into control.

“If an organization requires a new vision and radical change, an authoritative style is best.” (Chapter 6: leadership n.d).

The organizational goal was deteriorating and the individual operator goals were being perceived. A radical change that will make the operators focus on achieving a common goal and vision has to be brought in.


Workout World which is negatively affected due to the differentiation in the individual subunits can be molded into a high-performing organization by managing the conflict conditions tactfully.

“Conflicts are the lifeblood of high-performing organizations. Disputes, disagreements and diverse points of view about strategy and implementation create energy, bring about change, stimulate creativity and help form strongly bonded teams in full alignment.” (Kohlrieser 2007).

The case study stands unique in highlighting various aspects of Organizational Behaviour essential for the successful management of an organization.


Integration of the whole organization can be a recommended solution. Integration can be achieved through unity of command, deploying a cross-functional team that will bring in shared commitments between the business units.

Implementing Unity of command

We find unity of command as one missing element in the administration of WW.

“Administrative efficiency is supposed to be enhanced by arranging the members of the organization in a determinate hierarchy of authority to preserve “unity of command”.” (Simon 2007).

The independent operators should be subject to the authority of the General Manager. The below span of control can be used:

Implementing Unity of command

This structure should be documented in a new contract and strictly implemented.

Setting up of a cross-functional team

Peter can call for a meeting of all teams and ask Ann to present the findings before them making them realize the seriousness of the issue and invite suggestions from each functional head. Peter can suggest the setting up of a cross-functional team that will involve one member from every team.

“A standard cross-functional team is composed of those individuals from departments within the firm whose competencies are essential in achieving an optimal evaluation.” (Parker 2003).

This cross-functional team will be responsible for:

  • Creating clear goals for the team and a proposed plan to accomplish these goals.
  • They will work for gaining the commitment of team members.
  • It will highlight collaborative efforts and teamwork. Design policies and procedures to facilitate a team-based environment in Workout World.

Setting up goals to bring shared commitments and interdependencies between teams

The common causes of disagreement in WW are differences over goals, interests, and values. Peter with the help of the newly formed cross-functional team can work on creating goals and achieving them which will require a collaborative team effort and make the teams dependent on one another.

“Being mutually dependent means that A relies positively on the quality and timeliness of B’s work and vice versa.” This has to be opposed to “distributed cooperation” where operators share an information space but are not necessarily conscious of other operators’ work.” (Detienne 2006).

As proposed by Françoise, in his article ‘Collaborative design: managing task interdependencies and multiple Perspectives’ there should be the construction of tightly coupled work dependent on the talents of a collection of workers in WW. An example for setting interdependencies, the marketing team will conduct meeting with other teams every fortnight for designing the promotional and sales strategies. The mechanism of the work should be mutually dependent and will typically need frequent communication between the group members with short feedback loops and multiple streams of interaction.

Thus, this integration will bring about a win-win situation in the organization of Workout World.


Bercovitch, J., n.d. Conflict and conflict management in organizations: a framework for analysis. 2009. Web.

Chapter 6: leadership: which leadership style is best?, n.d. [Online] 2009. Web.

Dealing with conflict, n.d. [Online] 2009. Web.

Detienne, F., 2006. Collaborative design: managing task interdependencies and multiple perspectives. Interacting with Computers, [Online]. Web.

Fisher, R.J., n.d. The handbook of conflict resolution: theory and practice: chapter eight: intergroup conflict.2009. Web.

Ikeda, A.A., Veludo-de-Oliveira, T.M. & Campomar, M.C., 2005. Organizational conflicts perceived by marketing executives. Electronic Journal of Business Ethics and Organisational Studies, [Online]. Web.

Kohlrieser, G., 2007. Perspective s for managers: six essential skills for managing conflict. IMD: Real World, Real Learning. Web.

O’Leary, R. & Bingham, L.B., 2008. Management: resolving conflicts in collaborative networks. Business of Web.

Olum, Y., 2004. Modern management theories and practices.Web.

Parker, G., 2003. Cross-functional teams: working with allies, enemies, and other strangers.Web.

Pelled, L.H. & Adler, P.S., 1994. Antecedents of intergroup conflict in multifunctional product development teams: a conceptual model. IEEE Transactions on Engineering Management, Web.

Rahim, M.A., 2002. Toward a theory of managing organizational conflict: nature of the conflict. The International Journal of Conflict Management, Web.

Simon, H.A., 2007. The proverbs of administration. Public Administration Review, [Online]. 6 (1), pp.53-67. Web.

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