Deck 17: Managing Conflict, Politics, and Negotiation

Question 1

Effective and Ineffective Conflict Resolution
Think about two recent conflicts that you had with other people-one conflict that you felt was effectively resolved (C1) and one that you felt was ineffectively resolved (C2). The other people involved could be coworkers, students, family members, friends, or members of an organization that you are a member of.
Answer the following questions:
Briefly describe C1 and C2. What type of conflict was involved in each of these incidents?

Answer 1

C1 refers to a conflict, occurred in a family. The cause of the dispute was of property. Two real brothers believed that their parents were biased towards their opposite brother and would eventually handover the property to them. Following which, two brothers were not able to maintain good relationship. This situation falls in an intergroup conflict.
C2 refers to a conflict situation, occurred in an organization. The conflict was between the team member and their manager. The team members observed that the manager works for his own self-interest and don't address the team member's goals and achievements. Eventually, the conflict could not be resolved. This conflict turned out to be an interpersonal conflict.

Question 2

Effective and Ineffective Conflict Resolution
Think about two recent conflicts that you had with other people-one conflict that you felt was effectively resolved (C1) and one that you felt was ineffectively resolved (C2). The other people involved could be coworkers, students, family members, friends, or members of an organization that you are a member of.
Answer the following questions:
What could you have done differently to more effectively manage conflict in C2?

Answer 2

The conflict management strategy which could have been adopted in C2 situation was job rotation.
With the help of job rotation, these team members will learn new skills which will help them in keeping engaged. This would further help the organization in getting more work done through these team members. Moreover, it expands the organizational member's knowledge base and proves it be beneficial for other departments. Hence job rotation can be a useful way of resolving a conflict.

Question 3

You are a middle manager in a large corporation, and lately you feel that you are caught between a rock and a hard place. Times are tough; your unit has experienced layoffs; your surviving subordinates are overworked and demoralized; and you feel that you have no meaningful rewards, such as the chance for a pay raise, bonus, or promotion, to motivate them with. Your boss keeps increasing the demands on your unit as well as the unit's responsibilities. Moreover, you believe that you and your subordinates are being unfairly blamed for certain problems beyond your control. You believe that you have the expertise and skills to perform your job effectively and also that your subordinates are capable and effective in their jobs. Yet you feel that you are on shaky ground and powerless given the current state of affairs. What are you going to do?

Answer 3

Not Answer

Question 4

Tough Love at Chrysler
W hen Fiat-Chrysler Chief Executive Officer Sergio Marchionne spoke for the first time to his new U.S. employees in June, he quickly dispensed with the rah-rah rhetoric. Standing in the four-story atrium at Chrysler's Auburn Hills (Michigan) headquarters, a couple thousand people hanging on his every word, the new chief thanked U.S. taxpayers for their forbearance and praised Chrysler veterans for their fortitude. Shortly after that, Marchionne, a rumpled figure in slacks and a black polo shirt sporting a Chrysler logo, cut to the chase. "In this business," he said, "mediocrity will kill you. We can't accept it."
For the third time in 11 years, Chrysler is bracing for the vagaries of new ownership. First it was the Germans, then the private equity guys, now the Italians. Many executives who watched Marchionne that day express relief that he and Fiat want to revive an automaker many had given up for dead. On the other hand, they have heard about the new boss's operating style. Marchionne, who declined to comment, demands teamwork while pitting divisions against each other. He isn't afraid to promote from deep in the ranks, and he expects executives to put in seven-day weeks as he does. That's how he brought Fiat back from the brink. "Only two people have turned around car companies [recently], Sergio and Nissan's Carlos Ghosn," says Ron Bloom, who heads the U.S. Treasury Department's Auto Task Force. "His decision making moves quickly. He's a firm believer in meritocracy."
Man in a Hurry
There is little time to waste. Bankruptcy harmed a company that already had lost much of the buying public. Chrysler's models are older and less fuel-efficient than rivals'; not one vehicle gets the Consumer Reports seal of approval. Then there are the gaping holes in the lineup.
Marchionne will have to restore luster to Jeep, Chrysler, and Dodge, and plug those holes with small, fuel-efficient vehicles designed by Fiat. His biggest challenge will be replacing misfires such as the Sebring sedan, Jeep Compass, and Dodge Caliber-with the kind of mass-market vehicles that will make or break Chrysler. "Getting that right is where a lot of energy is being poured because that's the cake and the rest is icing," says a Chrysler executive, who expects Marchionne to approve a five-year product plan this month.
It doesn't help that Marchionne, 57, is inheriting a company suffering a crisis of confidence. The Chrysler of yore was a swaggering place-agile and unafraid of taking chances. In 1998 Daimler bought the company and over the next nine years managed to squelch much of the Chrysler esprit de corps. Two years ago Cerberus Capital Management gained control. Faced with a far worse market than anyone had predicted, Cerberus cut and cut-and then cut some more.
Marchionne assumed Chrysler still had a brain trust. He wasn't about to bring in a bunch of outsiders. "He thinks there are good people at Chrysler," says Stefano Aversa, co-chief of the consultancy Alix Partners, who has worked with Marchionne. "He wants to retain the U.S. culture." Of Marchionne's 23 direct reports at Chrysler, 3 came from Fiat.
Rather than rely on suggestions from top management, Marchionne asked more than 100 middle- and lower-ranked staffers what they thought of their bosses. Then, say people familiar with the process, he picked people most respected by their subordinates. "If he didn't hear expressions of leadership voluntarily from people, he took it as a sign that they didn't view the executive as a leader," says a staffer Marchionne interviewed. Several senior people have since left, including the sales and marketing chief and the product development czar.
Marchionne then reached deep into the company to find talent. For example, he grabbed Peter L. Fong, who was running sales for the mid-Atlantic states, and made him president and CEO of the Chrysler brand. An outside executive who was privy to the process says Marchionne had heard Fong was a great sales guy and well-respected.
To help strengthen and focus Chrysler's brands, Marchionne decided they should compete with each other for marketing and development resources. He has turned Dodge, Jeep, and Chrysler into separate companies, each with its own CEO. The risk is that the brand chiefs wind up undermining each other. To prevent that, Marchionne gave these executives corporate responsibilities, too. For example, Fong runs the Chrysler brand but is also in charge of sales for the whole company. The Dodge chief is responsible for the marketing strategy of all three brands.
No lover of hierarchy and process, Marchionne has stripped people of fancy titles and moved the CEO's office from the 15 th story to the ground floor, where designers and engineers dream up new cars. He encourages low- and midlevel staff to keep the work moving even if they have to bypass a supervisor to get a project or expenditure approved. Before, says a Chrysler executive, "People guarded the chain of command and their titles like mother lions."
Marchionne is at heart a delegator. He sets goals and expects his reports to tell him how to proceed. For example, the chief was set on quickly bringing Fiat to the United States and ditching the Chrysler brand. His team persuaded him that doing so would be too expensive right now. But there is one area where Marchionne gets deeply hands-on: marketing, a discipline that Chrysler desperately needs to get right. Marchionne personally approves every ad and already has been meeting with BBDO, the automaker's long-time advertising agency.
Marchionne's plan to combine the best of Fiat (small cars) with the best of Chrysler (pickups, minivans, and SUVs) makes sense in theory. But today's auto market is every bit as Darwinian as Marchionne's management philosophy. As he told his troops in June, "We have been given this incredible second chance to rethink everything we do. There will not be a third."
In what ways has he tried to make everyone a winner?
Source: D. Welch, D. Kiley, and C. Matlack, "Tough Love at Chrysler," BusinessWeek, August 24 and 31, 2009, 26-28. Reprinted from August 24, 2009 and August 31, 2009 issue of Bloomberg Businessweek by special permission, copyright © 2009 by Bloomberg L.P.

Question 5

Tough Love at Chrysler
W hen Fiat-Chrysler Chief Executive Officer Sergio Marchionne spoke for the first time to his new U.S. employees in June, he quickly dispensed with the rah-rah rhetoric. Standing in the four-story atrium at Chrysler's Auburn Hills (Michigan) headquarters, a couple thousand people hanging on his every word, the new chief thanked U.S. taxpayers for their forbearance and praised Chrysler veterans for their fortitude. Shortly after that, Marchionne, a rumpled figure in slacks and a black polo shirt sporting a Chrysler logo, cut to the chase. "In this business," he said, "mediocrity will kill you. We can't accept it."
For the third time in 11 years, Chrysler is bracing for the vagaries of new ownership. First it was the Germans, then the private equity guys, now the Italians. Many executives who watched Marchionne that day express relief that he and Fiat want to revive an automaker many had given up for dead. On the other hand, they have heard about the new boss's operating style. Marchionne, who declined to comment, demands teamwork while pitting divisions against each other. He isn't afraid to promote from deep in the ranks, and he expects executives to put in seven-day weeks as he does. That's how he brought Fiat back from the brink. "Only two people have turned around car companies [recently], Sergio and Nissan's Carlos Ghosn," says Ron Bloom, who heads the U.S. Treasury Department's Auto Task Force. "His decision making moves quickly. He's a firm believer in meritocracy."
Man in a Hurry
There is little time to waste. Bankruptcy harmed a company that already had lost much of the buying public. Chrysler's models are older and less fuel-efficient than rivals'; not one vehicle gets the Consumer Reports seal of approval. Then there are the gaping holes in the lineup.
Marchionne will have to restore luster to Jeep, Chrysler, and Dodge, and plug those holes with small, fuel-efficient vehicles designed by Fiat. His biggest challenge will be replacing misfires such as the Sebring sedan, Jeep Compass, and Dodge Caliber-with the kind of mass-market vehicles that will make or break Chrysler. "Getting that right is where a lot of energy is being poured because that's the cake and the rest is icing," says a Chrysler executive, who expects Marchionne to approve a five-year product plan this month.
It doesn't help that Marchionne, 57, is inheriting a company suffering a crisis of confidence. The Chrysler of yore was a swaggering place-agile and unafraid of taking chances. In 1998 Daimler bought the company and over the next nine years managed to squelch much of the Chrysler esprit de corps. Two years ago Cerberus Capital Management gained control. Faced with a far worse market than anyone had predicted, Cerberus cut and cut-and then cut some more.
Marchionne assumed Chrysler still had a brain trust. He wasn't about to bring in a bunch of outsiders. "He thinks there are good people at Chrysler," says Stefano Aversa, co-chief of the consultancy Alix Partners, who has worked with Marchionne. "He wants to retain the U.S. culture." Of Marchionne's 23 direct reports at Chrysler, 3 came from Fiat.
Rather than rely on suggestions from top management, Marchionne asked more than 100 middle- and lower-ranked staffers what they thought of their bosses. Then, say people familiar with the process, he picked people most respected by their subordinates. "If he didn't hear expressions of leadership voluntarily from people, he took it as a sign that they didn't view the executive as a leader," says a staffer Marchionne interviewed. Several senior people have since left, including the sales and marketing chief and the product development czar.
Marchionne then reached deep into the company to find talent. For example, he grabbed Peter L. Fong, who was running sales for the mid-Atlantic states, and made him president and CEO of the Chrysler brand. An outside executive who was privy to the process says Marchionne had heard Fong was a great sales guy and well-respected.
To help strengthen and focus Chrysler's brands, Marchionne decided they should compete with each other for marketing and development resources. He has turned Dodge, Jeep, and Chrysler into separate companies, each with its own CEO. The risk is that the brand chiefs wind up undermining each other. To prevent that, Marchionne gave these executives corporate responsibilities, too. For example, Fong runs the Chrysler brand but is also in charge of sales for the whole company. The Dodge chief is responsible for the marketing strategy of all three brands.
No lover of hierarchy and process, Marchionne has stripped people of fancy titles and moved the CEO's office from the 15 th story to the ground floor, where designers and engineers dream up new cars. He encourages low- and midlevel staff to keep the work moving even if they have to bypass a supervisor to get a project or expenditure approved. Before, says a Chrysler executive, "People guarded the chain of command and their titles like mother lions."
Marchionne is at heart a delegator. He sets goals and expects his reports to tell him how to proceed. For example, the chief was set on quickly bringing Fiat to the United States and ditching the Chrysler brand. His team persuaded him that doing so would be too expensive right now. But there is one area where Marchionne gets deeply hands-on: marketing, a discipline that Chrysler desperately needs to get right. Marchionne personally approves every ad and already has been meeting with BBDO, the automaker's long-time advertising agency.
Marchionne's plan to combine the best of Fiat (small cars) with the best of Chrysler (pickups, minivans, and SUVs) makes sense in theory. But today's auto market is every bit as Darwinian as Marchionne's management philosophy. As he told his troops in June, "We have been given this incredible second chance to rethink everything we do. There will not be a third."
To what extent do you think Sergio Marchionne is effectively managing conflict at Fiat-Chrysler?

Question 6

How can managers promote integrative bargaining?

Question 7

Think of a major conflict in the business world that you have read about in the past few weeks. Then search on the web for magazine and newspaper articles presenting differing viewpoints and perspectives on the conflict. Based on what you have read, how are the parties to this conflict handling it? Is their approach functional or dysfunctional, and why?

Question 8

Negotiating a Solution
Form groups of three or four people. One member of your group will play the role of Jane Rister, one member will play the role of Michael Schwartz, and one or two members will be observer(s) and spokesperson(s) for your group.
Jane Rister and Michael Schwartz are assistant managers in a large department store. They report directly to the store manager. Today they are meeting to discuss some important problems they need to solve but about which they disagree.
The first problem hinges on the fact that either Rister or Schwartz needs to be on duty whenever the store is open.For the last six months, Rister has taken most of the least desirable hours (nights and weekends). They are planning their schedules for the next six months. Rister thought Schwartz would take more of the undesirable times, but Schwartz has informed Rister that his wife has just gotten a nursing job that requires her to work weekends, so he needs to stay home weekends to take care of their infant daughter.
The second problem concerns a department manager who has had a hard time retaining salespeople in his department. The turnover rate in his department is twice that in the other store departments. Rister thinks the manager is ineffective and wants to fire him. Schwartz thinks the high turnover is just a fluke and the manager is effective.
The last problem concerns Rister's and Schwartz's vacation schedules. Both managers want to take off the week of July 4, but one of them needs to be in the store whenever it is open.
When called on by the instructor, observers communicate to the rest of the class how Rister and Schwartz resolved their conflicts, whether they used distributive negotiation or integrative bargaining, and their actual solutions.

Question 9

Discuss why too little conflict in an organization can be just as detrimental as too much conflict.

Question 10

Effective and Ineffective Conflict Resolution
Think about two recent conflicts that you had with other people-one conflict that you felt was effectively resolved (C1) and one that you felt was ineffectively resolved (C2). The other people involved could be coworkers, students, family members, friends, or members of an organization that you are a member of.
Answer the following questions:
How was the conflict resolved in C1 and in C2?

Question 11

One political strategy managers can engage in is controlling the agenda by subtly influencing which alternatives are considered or even whether a decision is up for discussion. Some employees believe this can be unethical and can prevent important issues from being raised and points of view from being expressed.
Either individually or in a group, think about the ethical implications of controlling the agenda as a political strategy.

Question 12

Why do organizational politics affect practically every organization?

Question 13

Negotiating a Solution
Form groups of three or four people. One member of your group will play the role of Jane Rister, one member will play the role of Michael Schwartz, and one or two members will be observer(s) and spokesperson(s) for your group.
Jane Rister and Michael Schwartz are assistant managers in a large department store. They report directly to the store manager. Today they are meeting to discuss some important problems they need to solve but about which they disagree.
The first problem hinges on the fact that either Rister or Schwartz needs to be on duty whenever the store is open.For the last six months, Rister has taken most of the least desirable hours (nights and weekends). They are planning their schedules for the next six months. Rister thought Schwartz would take more of the undesirable times, but Schwartz has informed Rister that his wife has just gotten a nursing job that requires her to work weekends, so he needs to stay home weekends to take care of their infant daughter.
The second problem concerns a department manager who has had a hard time retaining salespeople in his department. The turnover rate in his department is twice that in the other store departments. Rister thinks the manager is ineffective and wants to fire him. Schwartz thinks the high turnover is just a fluke and the manager is effective.
The last problem concerns Rister's and Schwartz's vacation schedules. Both managers want to take off the week of July 4, but one of them needs to be in the store whenever it is open.
The group members playing Rister and Schwartz assume their roles and negotiate a solution to these three problems.

Question 14

Why do effective managers need good political skills?

Question 15

Effective and Ineffective Conflict Resolution
Think about two recent conflicts that you had with other people-one conflict that you felt was effectively resolved (C1) and one that you felt was ineffectively resolved (C2). The other people involved could be coworkers, students, family members, friends, or members of an organization that you are a member of.
Answer the following questions:
What was the source of the conflict in C1 and in C2?

Question 16

What steps can managers take to ensure that organizational politics are a positive force leading to a competitive advantage, not a negative force leading to personal advantage at the expense of organizational goal attainment?

Question 17

Tough Love at Chrysler
W hen Fiat-Chrysler Chief Executive Officer Sergio Marchionne spoke for the first time to his new U.S. employees in June, he quickly dispensed with the rah-rah rhetoric. Standing in the four-story atrium at Chrysler's Auburn Hills (Michigan) headquarters, a couple thousand people hanging on his every word, the new chief thanked U.S. taxpayers for their forbearance and praised Chrysler veterans for their fortitude. Shortly after that, Marchionne, a rumpled figure in slacks and a black polo shirt sporting a Chrysler logo, cut to the chase. "In this business," he said, "mediocrity will kill you. We can't accept it."
For the third time in 11 years, Chrysler is bracing for the vagaries of new ownership. First it was the Germans, then the private equity guys, now the Italians. Many executives who watched Marchionne that day express relief that he and Fiat want to revive an automaker many had given up for dead. On the other hand, they have heard about the new boss's operating style. Marchionne, who declined to comment, demands teamwork while pitting divisions against each other. He isn't afraid to promote from deep in the ranks, and he expects executives to put in seven-day weeks as he does. That's how he brought Fiat back from the brink. "Only two people have turned around car companies [recently], Sergio and Nissan's Carlos Ghosn," says Ron Bloom, who heads the U.S. Treasury Department's Auto Task Force. "His decision making moves quickly. He's a firm believer in meritocracy."
Man in a Hurry
There is little time to waste. Bankruptcy harmed a company that already had lost much of the buying public. Chrysler's models are older and less fuel-efficient than rivals'; not one vehicle gets the Consumer Reports seal of approval. Then there are the gaping holes in the lineup.
Marchionne will have to restore luster to Jeep, Chrysler, and Dodge, and plug those holes with small, fuel-efficient vehicles designed by Fiat. His biggest challenge will be replacing misfires such as the Sebring sedan, Jeep Compass, and Dodge Caliber-with the kind of mass-market vehicles that will make or break Chrysler. "Getting that right is where a lot of energy is being poured because that's the cake and the rest is icing," says a Chrysler executive, who expects Marchionne to approve a five-year product plan this month.
It doesn't help that Marchionne, 57, is inheriting a company suffering a crisis of confidence. The Chrysler of yore was a swaggering place-agile and unafraid of taking chances. In 1998 Daimler bought the company and over the next nine years managed to squelch much of the Chrysler esprit de corps. Two years ago Cerberus Capital Management gained control. Faced with a far worse market than anyone had predicted, Cerberus cut and cut-and then cut some more.
Marchionne assumed Chrysler still had a brain trust. He wasn't about to bring in a bunch of outsiders. "He thinks there are good people at Chrysler," says Stefano Aversa, co-chief of the consultancy Alix Partners, who has worked with Marchionne. "He wants to retain the U.S. culture." Of Marchionne's 23 direct reports at Chrysler, 3 came from Fiat.
Rather than rely on suggestions from top management, Marchionne asked more than 100 middle- and lower-ranked staffers what they thought of their bosses. Then, say people familiar with the process, he picked people most respected by their subordinates. "If he didn't hear expressions of leadership voluntarily from people, he took it as a sign that they didn't view the executive as a leader," says a staffer Marchionne interviewed. Several senior people have since left, including the sales and marketing chief and the product development czar.
Marchionne then reached deep into the company to find talent. For example, he grabbed Peter L. Fong, who was running sales for the mid-Atlantic states, and made him president and CEO of the Chrysler brand. An outside executive who was privy to the process says Marchionne had heard Fong was a great sales guy and well-respected.
To help strengthen and focus Chrysler's brands, Marchionne decided they should compete with each other for marketing and development resources. He has turned Dodge, Jeep, and Chrysler into separate companies, each with its own CEO. The risk is that the brand chiefs wind up undermining each other. To prevent that, Marchionne gave these executives corporate responsibilities, too. For example, Fong runs the Chrysler brand but is also in charge of sales for the whole company. The Dodge chief is responsible for the marketing strategy of all three brands.
No lover of hierarchy and process, Marchionne has stripped people of fancy titles and moved the CEO's office from the 15 th story to the ground floor, where designers and engineers dream up new cars. He encourages low- and midlevel staff to keep the work moving even if they have to bypass a supervisor to get a project or expenditure approved. Before, says a Chrysler executive, "People guarded the chain of command and their titles like mother lions."
Marchionne is at heart a delegator. He sets goals and expects his reports to tell him how to proceed. For example, the chief was set on quickly bringing Fiat to the United States and ditching the Chrysler brand. His team persuaded him that doing so would be too expensive right now. But there is one area where Marchionne gets deeply hands-on: marketing, a discipline that Chrysler desperately needs to get right. Marchionne personally approves every ad and already has been meeting with BBDO, the automaker's long-time advertising agency.
Marchionne's plan to combine the best of Fiat (small cars) with the best of Chrysler (pickups, minivans, and SUVs) makes sense in theory. But today's auto market is every bit as Darwinian as Marchionne's management philosophy. As he told his troops in June, "We have been given this incredible second chance to rethink everything we do. There will not be a third."
What steps is he taking to try to ensure that the company has an optimal level of conflict?

Question 18

Think of a member of an organization whom you know and who is particularly powerful. What political strategies does this person use to increase his or her power?

Question 19

Why are compromise and collaboration more effective ways of handling conflict than accommodation, avoidance, and competition?

Question 20

Why is it best to use power unobtrusively? How are people likely to react to power that is exercised obtrusively?

Question 21

One political strategy managers can engage in is controlling the agenda by subtly influencing which alternatives are considered or even whether a decision is up for discussion. Some employees believe this can be unethical and can prevent important issues from being raised and points of view from being expressed.
What steps can managers and organizations take to ensure that this strategy does not result in important issues and differing points of view being suppressed in an organization?

Question 22

Interview a manager in a local organization to determine the kinds of conflicts that occur in that manager's organization and the strategies that are used to manage them.

Question 23

Negotiating a Solution
Form groups of three or four people. One member of your group will play the role of Jane Rister, one member will play the role of Michael Schwartz, and one or two members will be observer(s) and spokesperson(s) for your group.
Jane Rister and Michael Schwartz are assistant managers in a large department store. They report directly to the store manager. Today they are meeting to discuss some important problems they need to solve but about which they disagree.
The first problem hinges on the fact that either Rister or Schwartz needs to be on duty whenever the store is open.For the last six months, Rister has taken most of the least desirable hours (nights and weekends). They are planning their schedules for the next six months. Rister thought Schwartz would take more of the undesirable times, but Schwartz has informed Rister that his wife has just gotten a nursing job that requires her to work weekends, so he needs to stay home weekends to take care of their infant daughter.
The second problem concerns a department manager who has had a hard time retaining salespeople in his department. The turnover rate in his department is twice that in the other store departments. Rister thinks the manager is ineffective and wants to fire him. Schwartz thinks the high turnover is just a fluke and the manager is effective.
The last problem concerns Rister's and Schwartz's vacation schedules. Both managers want to take off the week of July 4, but one of them needs to be in the store whenever it is open.
Observers take notes on how Rister and Schwartz negotiate solutions to their problems.

Question 24

Effective and Ineffective Conflict Resolution
Think about two recent conflicts that you had with other people-one conflict that you felt was effectively resolved (C1) and one that you felt was ineffectively resolved (C2). The other people involved could be coworkers, students, family members, friends, or members of an organization that you are a member of.
Answer the following questions:
What conflict management strategies were used in C1 and in C2?

Question 25

Tough Love at Chrysler
W hen Fiat-Chrysler Chief Executive Officer Sergio Marchionne spoke for the first time to his new U.S. employees in June, he quickly dispensed with the rah-rah rhetoric. Standing in the four-story atrium at Chrysler's Auburn Hills (Michigan) headquarters, a couple thousand people hanging on his every word, the new chief thanked U.S. taxpayers for their forbearance and praised Chrysler veterans for their fortitude. Shortly after that, Marchionne, a rumpled figure in slacks and a black polo shirt sporting a Chrysler logo, cut to the chase. "In this business," he said, "mediocrity will kill you. We can't accept it."
For the third time in 11 years, Chrysler is bracing for the vagaries of new ownership. First it was the Germans, then the private equity guys, now the Italians. Many executives who watched Marchionne that day express relief that he and Fiat want to revive an automaker many had given up for dead. On the other hand, they have heard about the new boss's operating style. Marchionne, who declined to comment, demands teamwork while pitting divisions against each other. He isn't afraid to promote from deep in the ranks, and he expects executives to put in seven-day weeks as he does. That's how he brought Fiat back from the brink. "Only two people have turned around car companies [recently], Sergio and Nissan's Carlos Ghosn," says Ron Bloom, who heads the U.S. Treasury Department's Auto Task Force. "His decision making moves quickly. He's a firm believer in meritocracy."
Man in a Hurry
There is little time to waste. Bankruptcy harmed a company that already had lost much of the buying public. Chrysler's models are older and less fuel-efficient than rivals'; not one vehicle gets the Consumer Reports seal of approval. Then there are the gaping holes in the lineup.
Marchionne will have to restore luster to Jeep, Chrysler, and Dodge, and plug those holes with small, fuel-efficient vehicles designed by Fiat. His biggest challenge will be replacing misfires such as the Sebring sedan, Jeep Compass, and Dodge Caliber-with the kind of mass-market vehicles that will make or break Chrysler. "Getting that right is where a lot of energy is being poured because that's the cake and the rest is icing," says a Chrysler executive, who expects Marchionne to approve a five-year product plan this month.
It doesn't help that Marchionne, 57, is inheriting a company suffering a crisis of confidence. The Chrysler of yore was a swaggering place-agile and unafraid of taking chances. In 1998 Daimler bought the company and over the next nine years managed to squelch much of the Chrysler esprit de corps. Two years ago Cerberus Capital Management gained control. Faced with a far worse market than anyone had predicted, Cerberus cut and cut-and then cut some more.
Marchionne assumed Chrysler still had a brain trust. He wasn't about to bring in a bunch of outsiders. "He thinks there are good people at Chrysler," says Stefano Aversa, co-chief of the consultancy Alix Partners, who has worked with Marchionne. "He wants to retain the U.S. culture." Of Marchionne's 23 direct reports at Chrysler, 3 came from Fiat.
Rather than rely on suggestions from top management, Marchionne asked more than 100 middle- and lower-ranked staffers what they thought of their bosses. Then, say people familiar with the process, he picked people most respected by their subordinates. "If he didn't hear expressions of leadership voluntarily from people, he took it as a sign that they didn't view the executive as a leader," says a staffer Marchionne interviewed. Several senior people have since left, including the sales and marketing chief and the product development czar.
Marchionne then reached deep into the company to find talent. For example, he grabbed Peter L. Fong, who was running sales for the mid-Atlantic states, and made him president and CEO of the Chrysler brand. An outside executive who was privy to the process says Marchionne had heard Fong was a great sales guy and well-respected.
To help strengthen and focus Chrysler's brands, Marchionne decided they should compete with each other for marketing and development resources. He has turned Dodge, Jeep, and Chrysler into separate companies, each with its own CEO. The risk is that the brand chiefs wind up undermining each other. To prevent that, Marchionne gave these executives corporate responsibilities, too. For example, Fong runs the Chrysler brand but is also in charge of sales for the whole company. The Dodge chief is responsible for the marketing strategy of all three brands.
No lover of hierarchy and process, Marchionne has stripped people of fancy titles and moved the CEO's office from the 15 th story to the ground floor, where designers and engineers dream up new cars. He encourages low- and midlevel staff to keep the work moving even if they have to bypass a supervisor to get a project or expenditure approved. Before, says a Chrysler executive, "People guarded the chain of command and their titles like mother lions."
Marchionne is at heart a delegator. He sets goals and expects his reports to tell him how to proceed. For example, the chief was set on quickly bringing Fiat to the United States and ditching the Chrysler brand. His team persuaded him that doing so would be too expensive right now. But there is one area where Marchionne gets deeply hands-on: marketing, a discipline that Chrysler desperately needs to get right. Marchionne personally approves every ad and already has been meeting with BBDO, the automaker's long-time advertising agency.
Marchionne's plan to combine the best of Fiat (small cars) with the best of Chrysler (pickups, minivans, and SUVs) makes sense in theory. But today's auto market is every bit as Darwinian as Marchionne's management philosophy. As he told his troops in June, "We have been given this incredible second chance to rethink everything we do. There will not be a third."
How is he trying to promote collaboration at Fiat-Chrysler?

Question 26

Why should managers promote integrative bargaining rather than distributive negotiation?

Question 27

Negotiating a Solution
Form groups of three or four people. One member of your group will play the role of Jane Rister, one member will play the role of Michael Schwartz, and one or two members will be observer(s) and spokesperson(s) for your group.
Jane Rister and Michael Schwartz are assistant managers in a large department store. They report directly to the store manager. Today they are meeting to discuss some important problems they need to solve but about which they disagree.
The first problem hinges on the fact that either Rister or Schwartz needs to be on duty whenever the store is open.For the last six months, Rister has taken most of the least desirable hours (nights and weekends). They are planning their schedules for the next six months. Rister thought Schwartz would take more of the undesirable times, but Schwartz has informed Rister that his wife has just gotten a nursing job that requires her to work weekends, so he needs to stay home weekends to take care of their infant daughter.
The second problem concerns a department manager who has had a hard time retaining salespeople in his department. The turnover rate in his department is twice that in the other store departments. Rister thinks the manager is ineffective and wants to fire him. Schwartz thinks the high turnover is just a fluke and the manager is effective.
The last problem concerns Rister's and Schwartz's vacation schedules. Both managers want to take off the week of July 4, but one of them needs to be in the store whenever it is open.
Observers determine the extent to which Rister and Schwartz use distributive negotiation or integrative bargaining to resolve their conflicts..