Ford Dysfunctional Organization

In 2007, The Ford Motor Company (Ford) was struggling in the auto industry along with other auto companies. The chief executive was frustrated and felt that an insider no longer could fix Ford. He chose to hire Alan R. Mulally, a former chief of Boeing Company. Mulally began working hard to change the organizations work habits to help Ford to regain profits in the auto industry despite the economic problems they were facing.
Ford had become a dysfunctional organization because of relationship conflicts. According to McShane relationship conflict is a type of conflict which people focus on characteristics of other individuals rather than on the issues, as the source of conflict.
The divisions and departments at Ford had different objectives. They could not find common values and goals, and were not able to cooperate. The engineers became defensive, interrupting the testers at the Consumer Reports automobile testing facility. The members at Ford had the ???tendency to rationalize their mistakes??? (Bloomberg). Mulally??™s intervention during the incident at Consumer Reports automobile testing facility was good. He was able to stop the defensiveness of the engineers by asking them to stop and listen to what others had to say. Mulally encouraged teams to admit mistakes, share more information and cooperate across divisions.
There were a number of sources of conflict within Ford, their inability to resolve conflicting interests, intellectual biases, the royal hierarchy at Ford, and labor/management – supervisor/employee power differences. Some divisions and regions had goals that are incompatible with those of other divisions and regions. The members lacked communication. Good communication requires trust, a suspension of assumptions and hard work from executive level downward to front line employees. Executives were not able to interact with the lower subordinates. Executives need significant information from front-line employees to make good decisions. Yet they seldom know how to ask for meaningful information, input or feedback from employees. According to Bloomberg, ???The bureaucracy at Ford grew, and managers took refuge in the structure when things got tough rather that innovate or try new ideas that seemed risky.??? Effective management of workplace conflict requires an understanding of the nature and sources of conflict in the workplace.
Conflict that occurs in organizations need not be destructive, provided the energy associated with conflict is harnessed and directed towards problem-solving and organizational improvement. Conflict negotiation is a body of theory and a collection of skills. The theory and skills take on different forms according to the circumstances to which they are applied. The most important aspect of conflict negotiation is that the individuals/groups in conflict directly participate in the resolution of their own problem. Mulally turned the meetings of the divisional chiefs into meetings in which the subordinate accompanied the chiefs instead of just replacing them on occasion. He encouraged the interaction between the executives and the subordinates. He encouraged job collaboration by lengthening job tenures and encouraging more cooperation. His idea of reducing the engineering platforms from more than thirty (30) to five (5) or six (6) was good for accountability within the organization. He encouraged the managers to think more about the customers rather than their own careers.
Mulally has encouraged conflict in a good way. Conflict encourages people to debate issues and evaluate alternatives more thoroughly. It helps them reevaluate the basis of the problem and its possible solutions. According to McShane, ???moderate levels of conflict are inevitable and necessary as employees try to keep the organizations from stagnating and becoming non responsive to the needs of the customers and other stakeholders.??? Ford had reached that ???stagnating and non-responsive??? stage in the organization.


The New Heat on Ford. (n.d.) Retrieved from http:// (2007). Bloomberg Businessweek: The New Heat on Ford

McShane, S & Von Glinow, M (2010). Organizational Behavior, (5th e.d.). New York: McGraw-Hill Irwin.