Conflict is unavoidable in business.
Put people together with different personalities, ambitions, responsibilities, values, pressures, incentives and opinions, and disagreement will eventually occur. Add ownership, money, authority, family relationships, job security and commercial pressure, and disagreement can quickly become something much more damaging.
The real question for a business owner is therefore not:
“How do I eliminate conflict?”
It is:
“How do I stop healthy disagreement becoming destructive conflict, and how do I use disagreement to make my business stronger?”
That is why David Liddle’s Managing Conflict: A Practical Guide to Resolution in the Workplace deserves the attention of small-to-medium business owners and leaders.
The second edition, published by Kogan Page in 2023, substantially updates the original 2017 book. It addresses hybrid working, digitalisation, organisational trust and contemporary workplace dynamics while retaining Liddle’s central argument: organisations need to move away from unnecessarily adversarial approaches to conflict and towards a culture of resolution.
For SME owners, this is more than an HR issue.
Poorly managed conflict can damage productivity, leadership credibility, employee retention, customer service, decision-making and organisational culture. At its worst, it can fracture management teams, destroy partnerships and consume enormous amounts of management time.
The book’s greatest contribution is therefore not teaching managers how to “win” arguments.
It teaches leaders how to build businesses capable of disagreeing constructively.
Table of Contents
- Why SME Owners Should Read Managing Conflict
- Liddle’s Central Argument, Conflict Is Not the Enemy
- Functional Versus Dysfunctional Conflict
- Why Traditional Conflict Management Often Fails
- Understanding the Conflict Lifecycle
- The Psychology Behind Business Conflict
- Emotional Intelligence and Conflict
- Moving From Grievance to Resolution
- Mediation and the FAIR Approach
- Total Conflict Management
- Conflict Is Ultimately a Leadership Issue
- What Liddle Gets Particularly Right
- Where SME Owners Need to Apply Judgement
- A Practical Conflict Resolution Framework for SMEs
- Practical Recommendations
- Key Takeaways
- FAQs
- Conclusion
Why SME Owners Should Read Managing Conflict (Leadership Development Perth)
Most SME owners do not have sophisticated employee-relations departments, internal mediators or large HR teams.
That makes Liddle’s subject more relevant to SMEs, not less.
In a smaller business, relationships are concentrated. The owner may work directly with the senior management team. Two executives who stop communicating can affect the entire company. A dispute between shareholders can paralyse decision-making. Conflict between operations and sales can damage customers. A toxic manager can affect a significant percentage of the workforce.
The consequences are amplified because there are fewer organisational buffers.
This is why my existing article on business conflict and conflict resolution makes the distinction that conflict itself does not destroy businesses, poorly managed conflict does.
Liddle reaches a similar destination through a comprehensive examination of organisational conflict.
His book examines causes, costs, psychology, employment law, resolution processes, mediation and what he calls Total Conflict Management, a whole-system approach to preventing and resolving conflict.
That breadth is one of the book’s strengths.
Liddle’s Central Argument, Conflict Is Not the Enemy (Leadership Development Perth)
One of the most useful ideas in Managing Conflict is that conflict should not automatically be regarded as negative.
Healthy disagreement can improve a business.
A management team in which everyone agrees with the owner is not necessarily harmonious. It may simply be afraid.
Constructive disagreement can expose:
- flawed assumptions;
- strategic weaknesses;
- operational problems;
- unrealistic forecasts;
- customer issues;
- risks management has underestimated; and
- decisions that have not been sufficiently challenged.
This distinction between functional and dysfunctional conflict is fundamental.
Liddle describes functional conflict as healthy debate directed towards achieving a better outcome. Dysfunctional conflict is different. It can become personal, corrosive and increasingly difficult to resolve.
That distinction matters enormously for an SME.
The objective should not be a conflict-free organisation. It should be an organisation in which people can disagree vigorously without destroying relationships.
That is also one reason high-performance teams require psychological safety, accountability and trust rather than superficial harmony.
When Healthy Disagreement Becomes Dysfunctional Conflict (Business Improvement Perth)
Consider a simple progression.
Two managers disagree about a decision.
That is normal.
One starts questioning the other’s motives.
The disagreement becomes personal.
Communication declines.
Emails become defensive.
Meetings become uncomfortable.
People begin discussing the dispute with colleagues rather than with each other.
Teams take sides.
Information stops flowing freely.
Decisions slow.
The owner becomes involved.
Eventually, something that might have been resolved through a twenty-minute conversation becomes an organisational problem.
This is why Liddle’s discussion of the lifecycle of conflict is so useful. His book specifically examines how conflicts form, develop, escalate and ultimately become more difficult to resolve.
For SME leaders, the practical lesson is straightforward:
Intervene early.
Do not confuse avoidance with resolution.
Why Traditional Conflict Management Often Fails (Business Advisor Perth)
One of Liddle’s strongest criticisms concerns traditional grievance and disciplinary procedures.
Formal processes obviously have a legitimate place. Serious misconduct, bullying, harassment, discrimination, fraud, violence and legal or regulatory issues cannot simply be converted into friendly conversations.
But Liddle argues persuasively that organisations can reach for formal procedures too quickly.
Once a disagreement becomes a formal grievance, people often begin constructing cases.
Positions harden.
Evidence is collected.
Language becomes defensive.
Managers worry about liability.
Lawyers may become involved.
The question subtly changes from:
“How do we solve this?”
to:
“Who is right and who is wrong?”
That can be necessary in some circumstances.
But it is a poor default operating model for everyday organisational disagreement.
The book therefore advocates greater use of dialogue, early intervention, mediation and resolution-based approaches before disputes become unnecessarily adversarial.
For an SME owner, this is where experienced independent business advice can also be valuable. An outsider who is not emotionally invested in the dispute can sometimes see options the protagonists cannot.
The Psychology Behind Business Conflict (Leadership Development Perth)
Perhaps the most important part of conflict management happens before anyone starts discussing solutions.
It involves understanding what is actually happening psychologically.
People rarely enter serious disputes believing:
“I am being unreasonable.”
They construct narratives.
He doesn’t respect me.
She is undermining me.
They never listen.
The owner always sides with him.
I am carrying the whole team.
They are trying to push me out.
Once those narratives become entrenched, new information gets interpreted through them.
A delayed email becomes disrespect.
A question becomes criticism.
A disagreement becomes disloyalty.
A mistake becomes evidence of incompetence.
The underlying issue may eventually become almost secondary to the emotional meaning attached to it.
This is where Liddle’s emphasis on empathy, listening and understanding becomes particularly valuable. Effective mediation requires creating conditions in which people can hear each other’s underlying concerns rather than simply defend their positions.
Emotional Intelligence Is Conflict Management Infrastructure (Leadership Development Perth)
This connects directly with emotional intelligence and self-awareness.
A leader who cannot recognise his or her own triggers is poorly equipped to manage somebody else’s.
Consider what happens when an owner interprets challenge as disrespect.
A manager questions a decision.
The owner becomes defensive.
The manager senses hostility and retreats.
The owner concludes that the manager lacks conviction.
The manager concludes that speaking honestly is dangerous.
The next time, the manager remains silent.
Eventually the owner complains:
“Nobody challenges me.”
The problem is not conflict.
The problem is the leader’s reaction to conflict.
This is one of the deeper lessons I take from Liddle’s book: your organisation learns how safe disagreement is by watching what happens to people who disagree with those in authority.
That makes conflict management a leadership capability, not merely an HR competency.
Moving From a Grievance Culture to a Resolution Culture (Leadership Development Perth)
The philosophical centre of Managing Conflict is the move from grievance to resolution.
This is more profound than changing a policy.
A grievance culture asks:
Who caused the problem?
A resolution culture asks:
What happened, what needs to change and how do we move forward?
A grievance culture tends towards blame.
A resolution culture seeks understanding and accountability.
A grievance culture can encourage people to defend positions.
A resolution culture tries to uncover interests, needs and workable future behaviours.
Importantly, resolution does not mean avoiding accountability.
There are circumstances in which decisive management action is required.
Rather, the principle is:
Use the least adversarial process capable of resolving the problem properly, while retaining formal mechanisms for situations that genuinely require them.
For many SMEs, that would represent a major cultural improvement.
Mediation, From Positions to Interests (Leadership Development Perth)
Mediation occupies an important place in Liddle’s approach.
The mediator is not there to declare a winner.
The role is to create conditions in which the parties can communicate effectively, understand each other’s perspectives and develop their own resolution.
Liddle’s practical approach emphasises listening, empathy, understanding needs and goals, and helping parties create workable agreements rather than imposing an outcome upon them.
This resembles one of the fundamental principles of interest-based negotiation.
People argue about positions, but sustainable solutions are often found by understanding interests.
For example:
Position: “I want complete control over operations.”
But perhaps the underlying interest is:
“I am accountable for the result and I cannot accept responsibility without sufficient authority.”
That is a very different conversation.
The FAIR Approach to Conflict (Leadership Development Perth)
A particularly practical aspect of Liddle’s mediation methodology is captured in the FAIR framework.
At its simplest, the process encourages parties to move through four important stages:
Facilitate
Create a safe, structured environment in which people can explain what has happened and actually listen to one another.
Appreciate
Encourage each party to understand the other’s perspective, experience and needs.
Innovate
Move away from repeatedly analysing the past and begin developing alternative behaviours, arrangements and solutions.
Resolve
Convert understanding into agreed actions that the parties themselves own.
Liddle’s explanation of the latter stages emphasises empathy, creating new behaviours and ensuring that agreements belong to the participants rather than being imposed upon them.
For SME owners, this is far more useful than telling two managers:
“Sort it out between yourselves.”
Total Conflict Management, The Bigger Idea (Business Improvement Perth)
One of the most strategically important ideas in the book is Total Conflict Management.
The second edition describes this as a whole-system approach to managing conflict.
That changes the question.
Instead of asking:
“How do we resolve this dispute?”
management asks:
“How good is our organisation at preventing, identifying, containing and resolving conflict?”
That involves leadership.
Culture.
Policies.
Manager capability.
Communication.
Psychological safety.
Role clarity.
Accountability.
Mediation.
Escalation pathways.
This systems perspective is particularly powerful.
Conflict is often treated as an isolated interpersonal problem when its real causes may be structural.
Two managers may repeatedly fight because their responsibilities overlap.
That is partly a role clarity and accountability problem.
Departments may fight because their KPIs reward competing outcomes.
That is a performance-management problem.
Shareholders may fight because decision rights were never properly established.
That is partly a governance problem.
Senior executives may fight because the CEO tolerates political behaviour.
That is a leadership problem.
Sometimes the people are not the problem. The system is manufacturing the conflict.
That is an extremely important insight for SME owners.
Conflict Between Business Owners Is Particularly Dangerous (Governance & Boards)
There is another dimension that deserves greater emphasis in the SME context than it receives in many conventional HR discussions.
Conflict between employees is serious.
Conflict between owners can be existential.
When shareholders or business partners fall out, the dispute can simultaneously affect:
- ownership;
- employment;
- Board control;
- dividends;
- strategy;
- remuneration;
- succession;
- access to information;
- capital allocation; and
- ultimately the future of the company.
This is why business partner conflict should be anticipated rather than treated as an unimaginable event.
Good business governance helps establish decision rights and accountability before relationships deteriorate.
Likewise, a properly constructed shareholders’ agreement is considerably easier to negotiate while everybody still likes each other.
Conflict Is Ultimately a Leadership Issue (Executive Leadership Perth)
This may be the most important SME lesson in the entire book.
Leaders shape conflict culture.
They do it through what they reward.
What they tolerate.
How they react when challenged.
Whether they gossip.
Whether they take sides prematurely.
Whether they listen.
Whether they humiliate people.
Whether they address problems early.
Whether they distinguish disagreement from insubordination.
And whether they model the behaviour they expect from others.
This connects closely with different leadership styles.
A leader can have outstanding commercial intelligence and still create enormous organisational damage if people become frightened to disagree with them.
For owners who recognise this weakness in themselves or their management team, structured leadership development is not a soft intervention.
It is business risk management.
What Liddle Gets Particularly Right (Leadership Development Perth)
The book has several significant strengths.
First, it normalises conflict.
Trying to eliminate disagreement is unrealistic and potentially counterproductive.
Second, it emphasises early intervention.
Conflict usually becomes harder and more expensive to resolve as positions harden.
Third, it focuses on relationships as well as processes.
Policies matter, but humans do not behave like flowcharts.
Fourth, it challenges excessive formalisation.
Formal grievance processes are necessary, but they should not automatically be the first response to every interpersonal disagreement.
Fifth, it treats conflict management systemically.
This is perhaps its greatest strategic contribution.
Finally, it is practical. The book includes organisational case studies and tools such as conflict health checks and other resolution resources rather than remaining at the level of theory.
Where SME Owners Need to Apply Judgement (Business Advisor Perth)
No business book should be applied uncritically.
Managing Conflict is no exception.
The first limitation for Australian SME owners is jurisdiction.
Some of the employment-law context and institutional examples are inevitably influenced by the UK environment. The book does address conflict internationally, but Australian employers should obtain appropriate Australian workplace-relations or legal advice where formal employment matters arise.
Second, mediation is not appropriate for everything.
Serious misconduct cannot automatically be “mediated away”.
Third, power imbalances matter.
A junior employee negotiating with an intimidating founder is not necessarily participating on equal terms merely because both are sitting around the same table.
Fourth, some conflicts require decisions.
Leaders cannot use “resolution” as an excuse for indecision.
Sometimes the correct answer is:
No.
Sometimes performance is unacceptable.
Sometimes conduct crosses a line.
Sometimes a person needs to leave.
The leadership skill lies in knowing the difference between a conflict that requires dialogue, one requiring mediation, one requiring a management decision, and one requiring a formal investigation or professional advice.
That distinction is critical.
A Practical SME Conflict Resolution Framework (Business Advisor Perth)
Drawing on Liddle’s ideas and translating them specifically for SMEs, I would reduce conflict management to a practical eight-stage framework:
1. Detect
Identify tension early.
Do not wait for formal complaints.
2. Diagnose
Ask what the conflict is really about: task, role, personality, behaviour, resources, values, incentives, authority, ownership or trust?
3. De-escalate
Separate emotion from immediate decision-making where necessary.
4. Discuss
Get the relevant people talking directly rather than through organisational intermediaries and gossip networks.
5. Understand
Identify interests, fears, assumptions, needs and perspectives beneath stated positions.
6. Resolve
Agree specific actions, responsibilities, behaviours and boundaries.
7. Formalise where necessary
Use formal HR, governance, legal or disciplinary mechanisms when the seriousness of the matter requires them.
8. Review
Follow up. A signed agreement means little if behaviour reverts two weeks later.
This is deliberately simple.
An SME does not need a bureaucracy around conflict.
It needs a repeatable discipline for dealing with disagreement before disagreement starts dealing with the business.
Practical Recommendations for SME Owners & Leaders (Leadership Development Perth)
Start by examining your own behaviour.
Ask yourself:
How do I react when somebody strongly disagrees with me?
Then examine your organisation.
Are difficult conversations happening early, or are people avoiding them?
Are managers trained to manage disagreement?
Are responsibilities clear?
Do people understand how to escalate a genuine concern?
Are formal grievance processes being used when an informal conversation would be more effective?
Are there recurring conflicts that indicate a structural problem?
Do employees believe they can challenge senior people safely?
And perhaps most importantly:
What behaviour does your leadership team demonstrate when under pressure?
Conflict exposes culture.
It reveals whether values printed on the wall survive contact with reality.
Key Takeaways (Leadership Development Perth)
- Conflict is inevitable, destructive conflict is not.
- Healthy disagreement can improve decisions and prevent groupthink.
- Conflict becomes dangerous when disagreement becomes personalised.
- Early intervention is considerably easier than late-stage resolution.
- Avoidance is not conflict management.
- Formal grievance processes are necessary but should not automatically be the first response.
- Emotional intelligence is a core conflict-management capability.
- Role ambiguity, poor governance and badly designed incentives can manufacture conflict.
- Mediation can help parties move from entrenched positions towards underlying interests.
- Conflict management is ultimately a leadership and organisational capability.
FAQs About Managing Conflict by David Liddle
What is Managing Conflict by David Liddle about?
It examines how organisations can prevent, manage and resolve workplace conflict more constructively, including the causes and psychology of conflict, mediation, resolution processes and whole-system conflict management.
Is Managing Conflict worth reading for SME owners?
Yes. Although much of its language is aimed at HR practitioners, its principles are highly applicable to SME owners because interpersonal conflict can have disproportionately large consequences in smaller organisations.
What is David Liddle’s main argument?
A central argument is that organisations should move away from unnecessarily adversarial approaches and develop more collaborative, resolution-focused ways of managing conflict.
Is all workplace conflict bad?
No. Functional conflict can involve healthy debate that improves outcomes. Dysfunctional conflict becomes corrosive and potentially damaging.
What is Total Conflict Management?
It is Liddle’s whole-system approach to managing organisational conflict rather than treating disputes merely as isolated incidents.
Why is early intervention important?
Because conflict can escalate. As people become emotionally invested in their positions and relationships deteriorate, resolution generally becomes more difficult.
What role does emotional intelligence play?
Self-awareness, empathy, listening and emotional regulation help leaders recognise their own reactions and understand other people’s perspectives rather than escalating disagreement.
Should SMEs always use mediation?
No. Mediation is highly useful in appropriate circumstances, but serious misconduct, legal issues or circumstances involving significant risk may require formal processes and professional advice.
What can SME owners learn from the book?
Perhaps the biggest lesson is that conflict management should be treated as an organisational capability rather than an occasional response to a crisis.
Who should read Managing Conflict?
Business owners, CEOs, managers, HR professionals, Board members and anyone responsible for managing people or difficult workplace relationships can benefit from it.
Conclusion, Conflict Is Inevitable, Destructive Conflict Is a Leadership Choice (Leadership Development Perth)
Managing Conflict is an important book because it challenges a common misconception.
A good business is not one in which nobody argues.
A good business is one in which people can disagree honestly, challenge assumptions, raise difficult issues and have uncomfortable conversations without destroying trust, respect and working relationships.
David Liddle moves conflict management away from being merely an HR procedure and towards something much more important: a leadership and organisational capability.
For SME owners, that distinction matters.
The greatest danger is often not visible conflict.
It is unresolved conflict operating quietly beneath the surface, affecting communication, decision-making, morale, trust and performance.
The strongest businesses do not suppress disagreement.
They build the leadership maturity, governance, processes and culture required to turn disagreement into better decisions rather than damaged relationships.
And when conflict has already moved beyond the capacity of the people involved to resolve it objectively, bringing in an experienced independent Business Advisor, Business Coach or Non-Executive Chairman can provide the independence, structure and perspective needed to help move the organisation forward.
