Reconciling (business) dilemmas: effective leadership or constant compromises?

When talking about dilemma reconciliation we most often keep in mind the word ‘compromise’, or, in other words, that neither of the parties in an uncertain situation gets what it wants. This does not seem as an effective way of leadership, but is it that straightforward?

Let us take a closer look at what the word 'compromise' really means.

The article by Leadrshipwatch provides us with the Oxford dictionary explanations:

1.      An agreement or settlement of a dispute that is reached by each side making concessions.

2.      The expedient acceptance of standards that are lower than are desirable.

Still a bit in a conflict with the dilemma reconciliation description provided by the pioneer researchers of dilemma theory - Charles Hampden-Turner and Fons Trompenaars. They summarize their philosophy as follows:

“We can never grow to become great business leaders until we actively strive to embrace the behaviors and attitudes that feel most uncomfortable to us. The most effective management practices are those that gently force engineers, managers, and employees to embrace the unthinkable.”

Therefore, the essence of the reconciliation of a dilemma lies in the recognition that a dilemma is a non-linear problem and therefore needs a non-linear problem solving approach. It replaces “either-or” thinking with “and-and & through-and-through” thinking. For example, how can I through centralization become better at decentralization and how can I through decentralization become better at centralization?

Further we will review the types of dilemmas and the ways of working them through.

Universal dilemmas

Just as people develop a set of values based on the cumulative effect of the choices they make, so do the groups of people or communities (or companies). Any company encounter dilemmas, and some dilemmas are universal. Universal dilemmas include:

●     Whether (a) rules should apply to everyone or (b) exceptions should be made depending on who is involved.

●     Whether status should be awarded (a) on the basis of one’s position in the company or (b) on the basis of what one has achieved.

●     Whether (a) the needs of the company should outweigh the rights of individual members or (b) vice versa.

While these dilemmas are universal, the ways in which companies resolve them are not. Each society will develop its own pattern of values, perhaps putting (a) ahead of (b) with one dilemma but (b) ahead of (a) with another.

What determines which values develop in a particular community? It depends on the conditions that exist when the company first encounters a dilemma and the strength of a leader in each concrete company. All manner of variables have an effect. The personality dynamics of influential community leaders — the “core group,” to use the term coined by Art Kleiner — play a key role. The history of the company and its present needs all shape how it resolves a dilemma. When a company repeatedly resolves an issue by giving priority to one option, what was once a conscious choice becomes an unconsciously held value.

We generally don’t examine taken-for-granted ways of doing things until we encounter someone who does things differently.

Values are self-perpetuating. For example, if we value achievement — rewarding people for what they accomplish rather than who they are — we are naturally interested in how we can measure it. Having established a way of measuring achievement, we start to do so. In this way, we create an infrastructure to support a value that started off as a preference for one way of acting over another. As we use the infrastructure, we reinforce the value and strengthen our preference for it.

On an individual level, when children grow up, they take for granted that the way their family operates is the norm — how they celebrate holidays, deal with money, resolve conflicts, and so on. In the same way, people do not usually question the values of the company they work at. We generally do not examine taken-for-granted ways of doing things until we encounter someone who does things differently, whether at an individual or group level.

Some concrete examples of the stated above will include the following situations:

1.      Throughout the process of merge, it appeared to be two managers, responsible for the same department and similar scope of work. Since the change process is still going and the new task-list have not been created yet, the CEO decides to temporarily run the department until the change process is complete. This way the needs of the company clearly outweigh the rights and interests of separate individuals.

2.      Two departments within the same company are responsible for the launch of a new product. Department A is responsible for the technical specifications of the product and department B – for the marketing. Both have high standard of operation and both depend on each other. Department A cannot complete the technical development, until they get the feedback from actual customers, and department B cannot market the ‘dry’ product. The solution will be for the managers of both departments to lower their work standards and cooperatively get to a common agreement on launching the Beta version of the product. This way we see how the exception to the rules apply based on the parties involved.

 3.      Manager of the sales department is constantly being awarded for the amount of sales the department makes. The question to be raised is if the manager makes enough / good work to motivate the sales specialists OR the specialists should be awarded as well. The dilemma solves with the corporate culture and the organizational structure set in the company, either the sales manager motivates and awards the sales specialists or this lies on the CEO or higher management of the company.

Skilled incompetence and schismogenesis

Two more phenomena to be considered are skilled incompetence and schismogenesis.

At an organizational level, skilled incompetence often refers to company values stated in company statues and codes of conduct. These values often express qualities that people think are needed rather than ones that the organization actually possesses. In all probability, a quality will make it onto the list of “corporate values” because it is something the organization does not value. Which will obviously bring to the escalation of conflicts and misunderstanding.

To solve this dilemma the cultural differences within the company should be considered. The more global and culturally variegated the company is – the more flexible the list of values should be, taking into consideration possible variability on certain situations and management styles.

Schismogenesis. Is a term by the anthropologist Gregory Bateson. It means the splitting apart of complementary values. Schismogenesis happens when an initially small difference gets progressively bigger. Imagine the manager with a “reactive culture” background is getting late for the meeting for 5 minutes, while other attendee of the same meeting belong to the linear-active culture (read: come 5 minutes in advance and value every second of a meeting). Both feel they did everything right, and the more they start asking each other to stick to the same timing – the greater the conflict will escalate. What started off as a small difference has become enormous through the course of the interaction.

All the above are examples of situations where a compromise can add value. However, in my experience the value will often be temporary. I have witnessed how a compromise can bring a process a step further, but it does hardly ever create change with long-term and sustainable success.

Great leaders understand this, and are therefore reluctant to compromise. They have 3 fundamental reasons not to accept a compromise too easily:

1.    Leading change means aligning people around a clear vision

Great leaders know that this requires clear and intense communication, exchange of different points of view, and perseverance (read more about how to create a strong vision). They understand that compromise can easily blur the vision, can create confusion, and therefore undermines the motivation of people.

2.    Leading change means reconciling dilemmas

Successful leaders know that the complexity of change is often caused by the dilemmas we encounter (examples: ‘We want to harmonize processes on a global scale, while keeping our culture of local entrepreneurship intact’, ‘We need to intensify our cross-country collaboration, while facing a decrease in performance caused by cross-cultural differences’). Great leaders understand that in order to successfully reconcile dilemmas you combine the best of both sides. Which sometimes means creating something new. This can take time and requires intelligent decision-making. But they will not settle for a quick mediocre in-between solution. They only allow compromise as an intermediate step in the process. Not as an end solution that doesn’t solve the situation structurally (read about how to reconcile dilemmas in cross-cultural environments).         

3.    Leading change means knowing when to lead the way

Great leaders know that leading change sometimes means they will have to fight for their vision and values. They can sometimes face strong resistance and criticism. At these moments they are fully aware that it is about being able to connect, and to convince others why this change is important. This means they invest energy and time in communication, in increasing mutual understanding, and in strengthening alignment. But they will not compromise their values and vision.

Servant Leadership

The stated above can be put into a definition of Servant Leadership – the way of management, when the leader puts the interests of the team before their own. Such type of leadership often extends far beyond the environment of an organization or company and aims to reach everyone who is involved in business process – stakeholders, customers, even potential business partners. 

Robert K. Greenleaf brought the concept of servant leadership to business world after he published his book “The Servant as Leader” in 1970. The main principles include:

• service to others,
• holistic approach to work,
• promoting a sense of community,
• sharing of power in decision-making,
• providing subordinaries with sufficient training and resources to achieve goals,
• supporting the professional growth of employees.

Below we will review some good examples of how the servant leadership approach helps companies benefit:

TDIndustries

The company cares about their employees through the way it deals with profit. Around 30% of the profit is divided between the retirement savings plan and employment stock ownership plan. Additionally, there are no separate schemes for the executives – all are getting the equal share within the company.

Festival Foods

Festival Foods is the US-based chain that added some of the values from the servant leadership approach to their daily business routine. For instance, they implemented daily morning performance reviews to compare the sales amounts and identify the success/failure factors that led to the results. Moreover, each employee received an opportunity to share their ideas with the higher management, which resulted in the creation of communication lines between the people and made the overall atmosphere more open.

Starbucks

The Starbucks is well known for its exceptional customer service and wide presence in every corner of our planet. Apart from offering many non-standard benefits to their employees, company management helps employees cover their college tuition fees.

Marriott International

The founder of the company – Bill Marriott made service leadership the main concept of his business with the moto “the spirit to serve” being not just the phrase, but also the main corporate cultural peculiarity for the management and all the employees.

Nordstrom

Thanks to the customer-centric focus, this department store has a huge loyal fan base. However, they also benefit from the service leadership using the “inverted pyramid” organizational model. The highest level of importance within the company are sales and floor staff, while directors and executive team are at the bottom.

Zappos.com

Zappos is probably one of the best-known companies using the discussed above approach. Along with the publicly published 10 core values of the company (deliver wow through service, embrace and drive change, create fun and a little weirdness etc.) the inner structure of the company and even the way the office is designed is all about service leadership. For instance, Tony Hsieh, the CEO of Zappos sits at a desk of the same size and model as the ones given to the employees at the company’s call center. He sits with other executives in the same row, within an open space, being easily accessible to all employees.

 To conclude

While the world is rapidly changing – cultural values and soft skills become the main success factor for companies to keep on growing. For small “family type” local businesses the inner team “climate” is rather something natural, however, with the growth (and, in particular, the international escalation through merges and acquisitions) the management team becomes more heterogeneous – and here’s the pain point for the majority of business owners. A great number of dilemmas appear and in takes many resources to reconcile them appropriately for the business to value. Here the company culture and organizational structure come to scene. And if the fundamental core values are set properly – the company is moving smoothly towards any change.

With over 18 years of experience helping companies get through M&A process and post-merger integration, our company is a known expert in cultural integration and dilemma reconciliation. Through strategic workshop sessions with the management, BoD or team leaders we formulate, chart and creatively solve dilemmas leading while finding practical ways for implementation of an action plan. In the case of M&A and post-acquisition integration we design and implement the process facilitating training sessions and workshops for both sides in order to establish a new workable culture for all.

For more details, please contact us at: [email protected] or phone +31 208 081 509