Managing Interdepartmental Conflict: From Friction to Function

You can judge a Company by its institutional arguments. And yet, interdepartmental conflict is as old as the modern corporation itself, and far too many leaders still treat it like some kind of embarrassing mystery rather than the entirely predictable byproduct of competing incentives, scarce resources and sloppy communication. I've worked with companies in Sydney, Melbourne and Perth where squabbles between marketing and finance, operations and customer service, or logistics and sales, have derailed entire product launches. You don't have to wait for a big HR investigation to know it; all you have to do is watch who stops talking to whom. Let's be honest: a little conflict is inevitable. But most of it is avoidable. And when it is done well, it serves a purpose. That's my main point, conflict resolution training channelled correctly, is not an operational failure; it's raw data. It shows you where your systems, incentives and communication channels are not aligned. Fix the systems and the yelling will stop. Ignore it, and you get silos, projects running behind schedule and staff training members who silently detach. Only approximately 21% of workers are engaged at work worldwide, according to Gallup's State of the Global Workplace 2023, and separating from your coworkers isn't helped by disengagement. Organisations aiming to increase productivity might be best served by repairing how their teams communicate.

Why departments battle

There are three repeatable contagions that explain most of these interdepartmental spats.

1. Competing goals. Every department has a mandate. Sales is there to put revenue on the board. Finance to protect margins. Customer success to delight customers. Because those mandates are real, they sometimes conflict. Without a mechanism that turns organisational strategy into reconciled departmental objectives, you get friction.

2. Resource scarcity. Budgets, headcount, equipment, you can only have so much. Shortage transforms collaborators into rivals. If resourcing decisions are opaque, you will get passive aggressive behaviour and covert lobbying; if they are arbitrary, resentment.

3. Communication breakdown. Mismatched expectations, muddled messages are the grease to make small misunderstandings slide. Two departments can each be "right" in their bubble, but also mutually destructive when they collide on project management delivery.

Each of those deserves attention. Swallow one, and the others grow stronger. The good news? They're all fixable.

Real levers that actually work

You can throw a lot of training and optimism at interdepartmental friction and obtain marginal improvement. But if you want a real, culture changing, sustainable shift, use structures, incentives and routine to change behaviour. So these are what I push with clients, tactical, implementable and Australian business friendly.

1. Coordinate on goals, not just strategies

Don't bother with feel good platitudes about "one team one dream." Translate the corporate strategy to shared KPIs that are relevant across functions. If the primary goal is customer satisfaction, but don't just make it a customer service metric. Include NPS or average resolution time in product, operations, finance and sales scorecards. Shared KPIs have two effects: they create a language for trade offs, and they incentivise collective problem solving. A caveat: Common targets mean negotiation. You will need leaders who are willing to take a short term hit in exchange for the long term benefit. Centralised budgeting has a bad name, but I'll say it's underrated the extent to which it can be used to enforce strategic priorities. Some will disagree. That's fine. Respectful people can disagree and still come together.

2. Create cross functional squads for outcomes delivery

No more throwing requests over the wall of a functional area and expecting magic. Form temporary or permanent cross functional teams to address priority projects. Appoint a product owner, project lead or similar who has clear authority and be explicit about decision rights. This is not a fashion issue. When revenue, operations and engineers sit in a room together and commit to deadlines, they get an understanding of constraints, dependencies and timelines. They create empathy, something that is more difficult to replicate through a single training day.

3. Be transparent about resource allocation

If you can't share dollar amounts on budgets and headcount, at least be consistent. Make transparent the rules of the road on resource decisions. Organise quarterly prioritisation forums, where departments make cases against an agreed scoring. Let senior leaders be referee, not micromanager. I have worked with teams that have almost completely eliminated political manoeuvring by creating a prioritisation scorecard and publishing it. It didn't satisfy everyone, but it made the process legitimate. Legitimacy buys patience.

4. Standardise communication, and add nuance

Definitely, that sounds bureaucratic. But mixed signals are the slipstream that turns small matters into systemic ones. Introduce simple protocols, concise project brief templates, mandatory handover checklists and a common glossary of terms. For virtual organisations, a single project hub eliminates "version chaos." At the same time, advocate for adaptive communication training. Laziness in leadership is when we impose rigid frameworks that crush creativity. The key is to have templates for clarity and coaching for nuance. Another is for teams to put requests in wrappers that the recipient can use. It's simple. It works.

5. Employ mediation and facilitation early

Train managers to be mediators and deploy neutral facilitators when tensions mount. Facilitators aren't apologising for the sake of apology, they're trying to reveal interest beneath positions. A three hour facilitated workshop is likely more effective than three months of arguing by email. Facilitation also makes more possible with the soft stuff: who gets credit, how decisions get framed and the stories that people tell themselves.

6. Create a financial incentive for collective behaviour

Money talks and incentives matter. If the reward system is based on just individual or departmental performance, yes, you'll get competition. Implement recognition and reward systems to celebrate cross functional success, perhaps shared bonuses, team prizes or a presence in leadership forums. Public kudos for collaborative wins is more behaviour modifying than you'd think.

7. Train for conflict competence

Conflict is not a moral failing. It's a skill set. Teach people how to negotiate, ask questions and have difficult conversations based on interest. Role plays and scenario practice followed by after action reviews stick new habits better than lecture style workshops. Coach managers in the moment when disputes come up; learning on the job is one of the best ways to learn.

Tech as facilitator, not the solution

Collaboration platforms such as Microsoft Teams, Slack and Asana are ubiquitous. They help, but they don't cure misaligned incentives. Use them to uncover dependencies, bring workflows into the light or eliminate some of that back and forth that drives you nuts. But, please, don't use tools instead of governance. Process clarity leads to good tech use. If you map your processes and accountabilities first, and then pick tools that support them, the ROI is there. If you slap it and software and expect cultural change, then be disappointed.

Two perhaps unpopular opinions

1. Performance reviews shouldn't be dead

There's a lot of trendy noise lately about the death of annual performance reviews. I dissent, not because the old fashioned annual appraisal is so great, but because if done well, structured conversations about performance can aid in transparently set expectations throughout teams. Discard rigid ratings in favour of regular check ins and aligned goals, yes, but hold onto the rigour that forces leaders to address mediocre collaboration or recognise contributors.

2. Central authority is not coercive

Decentralisation is lauded. I'm a fan too. Yet strategy, in the absence of some central direction, fragments. Eliminates needing to micromanage prioritisation and resources (not central grotesque control mind you, but guess not like rendering a dozen well intentioned initiative cannibalisation on each other). These takeaways annoy some people. That's fine. I'd rather be helpful than have everyone love me.

Behaviours that matter to leadership

Leadership is behaviour setting. If your execs put up with public spats, back channel politicking, or opaque decision making, then trying to change your culture and company ways will fail. Leaders must create the model of exchange they wish for: openness, humility and a bias for structured problem solving. Practical moves for leadership training:

• Sponsor cross functional meetings and be a regular attendee.
• Publicly support shared KPIs and involve yourself in budget prioritisation.
• Reward the leaders who are solving interdepartmental problems before they become full blown crises.
• Hold teams accountable to process adherence, and celebrate chaos free deliverables!

An Australian angle: local context is everything

Australian workplaces tend to be flatter and less hierarchical than in the US, but that doesn't mean conflict will cause less harm. In fact, the informality may occasionally camouflage dysfunction. I've witnessed Melbourne startups where "we're all mates" hides persistent misalignment, and Canberra based agencies with a choking emphasis on process. Adapt your approach to local norms: keep the spirit of collaboration, but inject structure where necessary.

Training, tools and treaties, the operational mix

What does an operational programme entail? Start small and iterate.

Phase 1: Diagnosis

• Map key points of friction.
• Interview stakeholders from all departments.
• Determine the top three mutual goals that would drive improvement.

Phase 2: Quick wins

• Install one simple shared KPI or dashboard.
• Facilitate one cross functional planning session.
• Post a decision rights document for the MT's top strategic investments that is clear and unambiguous.

Phase 3: Embedding

• Implement active cross functional squads for priority work.
• Integrate training into manager development.
• Publish the results of an annual review of cross department collaboration.

Expect resistance. Change generates friction, ironic, since that is precisely what you are working to minimise. That's why both incremental wins and leadership buy in being visible are so important.

When to bring in outside help

Internal mediation may work for many conflicts, but certain cases call for bringing in an outside facilitator, especially when trust has been severely eroded or the argument centres on competing narratives of strategy. Neutrality and techniques to re establish working relationships are provided by external facilitators. We employ them with clients when internal options have been exhausted or high speed is called for. Consider workplace training to build these capabilities internally.

No magic, just discipline

There is no one magic bullet. The Organisations I respect operate with discipline and agility: processes where clarity is important alongside practices where creativity is valued. They track what counts, and they reward what they track. They invest in creating shared language and they intervene as necessary to adjudicate resource trade offs.

Here's the short version: Make it difficult for a department to close shop simply based on its incentives. Establish shared incentives, clear processes and rhythm of communication skills that pulls issues up early. Train people to disagree well. Reward the right behaviour. Consider team building courses to strengthen collaboration.

Organisations that do this successfully receive two things in return: less of a headache, and the capacity to move more rapidly when the market tides turn. They translate intraparty friction into constructive energy, the sort that scares the wits out of opponents.

Think of conflict as capital. It compounds if you spend it wisely. Investing in professional development and time management training can help your teams work together more effectively.

Sources & Notes

Gallup, "State of the Global Workplace 2023", global employee engagement statistic (approximately 21% engaged). Full citation: Gallup. State of the Global Workplace. Gallup, 2023.

Australian Human Resources Institute (AHRI) on workplace collaboration and leadership development. AHRI State of the Profession reports, 2021-2023.

*Noting that a selection of descriptive Organisation examples reflect the broad spectrum of client engagements across Sydney, Melbourne and Perth rather than individual organisations.