Conflict Management Strategies and Organizational Performance (A Survey of Microfinance Institutions in Nairobi)

Abstract

Organizational conflict arises when and if an employee thinks that their goals are under threat or is being hindered by another person’s activities. Unresolved or poor handling of conflicts may lead to exit of some employees from the organization. The objective of the study was to assess how conflict management strategies influence performance of Microfinance Institutions. The study was guided by the following specific aims, to: explore how accommodating strategy affects performance of Microfinance Institutions; assess how dominating strategy affects performance of Microfinance Institutions; determine how compromise strategy affects performance of Microfinance Institutions, and; examine the how collaborating strategy affects performance of Microfinance Institutions. The research study looked at the contingency theory, stakeholder theory and human relations management theory. The study employed descriptive survey research design. The study targeted 90 managers of MFIs that operate within Nairobi. A census method was adopted by the study. Questionnaires were used as the research instrument. The researcher confirmed validity of the instrument by discussing the questionnaire with research project supervisors who are experts in research. To confirm reliability of the instrument, the researcher did a pilot test. The questionnaires were administered using the method of drop and pick later. The gathered data information was coded and then analyzed by use of SPSS. In summary, the regression model showed: a significant inverse relationship between accommodating strategy and performance of MFIs in Nairobi; A significant positive relationship between dominating strategy and performance of MFIs in Nairobi; A significant negative relationship between compromise strategy and performance of MFIs in Nairobi, and; A significant direct relationship between collaborating strategy and performance of MFIs in Nairobi. The research deduces that: a counter association exists between performance of MFIs in Nairobi and accommodating strategy shown by coefficient value of -0.293 and significance value of 0.008; there exists a significant positive relationship between dominating strategy and performance of MFIs in Nairobi shown by coefficient of 0.694 and significance value of 0.000; a negative correlation exists between performance of MFIs in Nairobi and compromise strategy shown by coefficient of -0.530 and significance value of 0.003, and that a direct linkage exists between performance of MFIs in Nairobi and collaborating strategy indicated by coefficient of 1.121 and significance value of 0.000. The study recommended that: Managers should avoid using accommodating and compromise strategies unless it is very necessary, and; managers should always use dominating and collaborating strategies as they have direct relationship with organizational performance. The study proposes that future researchers explore nonfinancial institutions; other financial institutions and publicly owned organizations. The findings of this study will be of benefit to various parties. These include managers of MFIs, managers of other related institutions and businesses, regulating bodies and researchers and scholars.