The benefits of conflict at work

March 11, 2014, 8:28 PM UTC

FORTUNE — I once led an offsite with the top 100 leaders at a multinational chemical company. I was immediately struck by how humble, friendly, and polite this room full of engineers was. At one point, I decided to take a risk and let them know what a pleasant bunch of people they were, but that I wondered if their polite exterior might be masking conflicts that were simmering below the surface. A ripple of laughter went through the crowd. Embarrassed recognition?

When I asked them to rate the quality of their relationships within the company, 88% responded that they belonged in the “dysfunctional family” category, full of unacknowledged conflicts.

I wasn’t surprised. Conflict avoidance is one of the most common — and divisive –behaviors my company encounters at the companies we work with. Instead of dealing with differences of opinion and working collaboratively, people choke back what they think until the boss has left the meeting, or when they are alone with a clique of like-minded colleagues. Teams break down into small, polarized groups that pursue their own agendas.

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Yet despite what seems like an epidemic of unhealthy behavior, a lot of management literature flirts with condoning such practices.

In fact, most of today’s literature about managing workplace conflict is based on a 40-year-old model developed by Kenneth Thomas and Ralph Kilmann in 1974, which cites avoidance as one of five main strategies people use to deal with conflict. But Thomas and Kilmann make clear that conflict avoidance prevents teams from collaborating on important decisions, which simply don’t get made. That’s hardly an effective strategy.

Few people enjoy confronting others. Just the thought of conflict sparks anxiety in most people. Yet such problems don’t go away by themselves. They grow and fester.

So what can you do?

Put everyone in the same boat

The first step is to make sure individual business units’ goals are aligned with the organization’s goals. The larger the firm and the more diverse its products, the less likely these are to be aligned — and the more likely competing goals are causing friction between employees. Make sure everyone’s incentives are tied to the enterprise goals. Just telling employees that they need to put enterprise goals first is useless if their scorecard is solely dependent on the success of their little fiefdom. Ah, I mean business unit.

Lynn Elsenhans, former CEO of Sunoco, notes that aligning employee goals and incentives with enterprise targets will level the playing field and make everyone part of the conversation.

“People may not, at the beginning, like each other, trust each other, or even think that the other person is worthy,” says Elsenhans, “but if you make it the norm that everyone is accountable to the enterprise — and that we come together to discuss problems and options for solving those problems — you’ll start to build a climate of mutual trust and respect. People begin to look at things differently. ‘We are going to help each other to be successful so that the enterprise is successful.’” A natural outcome, she adds, is that people begin to feel they don’t want to let each other down.

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While Elsenhans’ approach has the potential to reduce the number of conflicts that arise, it doesn’t address the issue of how to have an out-in-the-open conflict with someone — and come out feeling the warm glow of the proverbial “win-win.”

Separate the person from the problem

A great resource for coaching your team to healthy issue resolution is Getting to Yes: Negotiating Agreement Without Giving In, by Roger Fisher and William L. Ury. They stress the importance of keeping the focus squarely on the problem that the company or team is facing, rather than on the person who represents the other side in the disagreement, which merely escalates tensions and pulls the focus away from the problem.

Another key point they make is that people often become entrenched in either-or positions rather than working collaboratively and creatively to find solutions. Instead, coach your team to look beyond the positions and try to figure out what the other person’s underlying interests are. Are they worried sales will decline if they follow the course you’re proposing? Are they concerned customers will be angry? Do they fear their group’s reputation will suffer? Positions can’t always be reconciled. Interests often can be, write Fisher and Ury. When both sides’ underlying interests have been uncovered, energies can be directed toward finding a solution that meets everyone’s most important needs.

Bring up tough issues

Plainly discussing topics that might prompt a negative reaction from a coworker — or worse, a boss — not only takes courage, it’s usually most successful when the whole firm, from top to bottom, is committed to doing it. But the potential benefits are significant.

When Reuters and Thompson merged in 2008, CEO Devin Wenig knew that the real challenge would be bringing together the two formerly competing staffs — a total of 50,000 employees in 93 countries. The potential for a toxic environment was huge. But from my first discussion with Wenig, I knew he was committed to creating a group that would not let each other fail.

“Building a cohesive team is my No. 1 priority,” said Wenig. “I want to build a team where people feel they can get the best out of each other … and know that everybody else has their back.”

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After a first session in which Wenig’s own staff opened up and began to see each other as nuanced human beings with strengths and weaknesses, we took it to the next level: establishing an environment where it was okay for people to call each other out. One executive called out Wenig himself for being distracted at times when approached about a problem. Despite the executive’s fear that he’d overstepped a line, Wenig not only took the criticism and changed his behavior, but other employees expressed their gratitude that he’d brought up an issue that was on their minds.

Not all companies are ready to make as full a commitment to being candid, but every team leader can take steps toward establishing a more honest — and supportive — culture. The potential upside in team cohesion and productivity is enormous.

Keith Ferrazzi is the founder and CEO of consulting firm Ferrazzi Greenlight and the author of Who’s Got Your Back and Never Eat Alone