Conflict management and economic development have more in common than you might think
This edition’s Steinbeis Swipe columnist, Dr. Wolfram Dreier, argues that conflict resolution can play an innovative role in economic development. And, with all due modesty, he should know better than most. He gained extensive experience in establishing economic development agencies while working for Steinbeis to promote economic development in the districts of Ravensburg and Göppingen. After various stints in the SME sector, he went on to study mediation, eventually obtaining a doctorate in conflict management. He is now the director of the Wangen-based Steinbeis Transfer Center for Conflict Resolution in the Allgäu region. In this article, Dreier explains why it is essential that conflict – a topic with such negative connotations – should be included within the compass of economic development.
A look back at the past of local economic development can perhaps serve up a couple of fresh insights. Ever since the 1980s, Steinbeis has been helping various towns and cities, districts and indeed regions to plan the establishment of economic development agencies, as well as providing technical support and human resources. The Steinbeis economic development agencies differed from traditional economic development officers – typically local government employees – in two key respects. Firstly, they were not primarily focused on designating commercial premises for new businesses. Instead, they recognized that there was far greater potential in economic development agencies developing and providing extensive support to the companies and businesses that were already there. And secondly, Steinbeis transformed economic development agencies into service providers. The traditional, reactive approach of only responding if contacted was radically overturned – the agencies actively reached out to companies and businesses to offer them support.
Why was this novel approach such a success? There is one simple explanation, which remains valid to this day. Businesses believe that the active support provided by Steinbeis adds value – they experience economic development as professional advice, support and networking in the areas that matter to them. The range of topics and services covered by the economic development agencies kept growing as time went by. While the focus during the late 1990s was still on technological change, implementing management methods and growing internationally, recent years have seen new topics enter the mix, such as digitalization and skilled professional recruitment.
The issues addressed may have changed over the years, but the recipe for successful, effective economic development remains the same: actively reaching out to companies on emerging topics that will be important in years to come, and adding value through services and solutions that have practical relevance to their business.
Conflict management skills are key to employee retention
So why do businesses need conflict management skills in today’s world? There is no question that the skills shortage is increasingly compromising companies’ ability to innovate. Economic development agencies recognized this several years ago and now offer businesses various kinds of help with skilled professional and young talent recruitment and with staff training. But it’s one thing to recruit skilled professionals – hanging on to them is a different matter altogether. And this is where conflict becomes an important issue. Conflicts are often the reason why skilled professionals leave a company, or become quiet quitters or the victims of quiet firing, making life difficult for everyone. Managers give up, colleagues are overworked. Creativity stagnates, costs spiral due to unhappy customers, performance drops off and people get ill. Other negative impacts include the cost of recruiting and onboarding replacements, burnout and even sabotage.
Companies lack the constructive conflict management skills to prevent these negative impacts. The people involved in conflicts still often see them as a threat and try to avoid or run away from them. Businesses need to break the taboo surrounding conflicts and get professional advice to highlight the opportunities they present. And it is here that economic development agencies can add significant value.
Recent research and case studies confirm the importance of proper conflict management to both innovation and employee retention. Because they are widely accepted as legitimate partners and have a close relationship with businesses, economic development agencies are well placed to raise awareness of this and either put forward solutions or bring in the appropriate experts. Economic development agencies can draw on Steinbeis and several other relevant associations and organizations to build up a pool of certified mediators with extensive practical experience. Depending on what is required, they can arrange information meetings, provide specific initial consultations, professionally facilitate sessions where the parties come together to share their points of view or, if the conflict has escalated, implement concrete resolution processes. But whatever they do, it is vital to always focus on adding value for the company.