NoMark 13 | - Freelance Writer
Aug 29, 2016 | #1
Introduction
This essay discusses the costs of a recent business conflict and discusses how it was resolved. The conflict examined is the case of Ellen Pao, a former Silicon Valley venture capitalist who recently took on the position of CEO at Reddit, a popular online community. Pao filed a gender discrimination against her former organization, Kleiner Perkins Caulfield & Byers, a high-profile venture capital firm. The case was heard in March this year. During the case, Pao stated that she was excluded from important meetings, events, and other activities, and was passed over for promotion in favor of male employees more junior than herself. She also stated that she was subjected to sexual harassment after ending a forced affair with senior partner Ajit Nazre, and that this ultimately led to her firing. The firm rejected these claims, stating that she was fired for under-performance and poor interpersonal skills. The jury ruled against Pao, although she did file an appeal. The most recent development in the case was that Pao has been ordered to pay $276,000 in legal fees, about a quarter of the requested fees from Kleiner Perkins. Although this case has clear financial costs associated, each of the parties to the conflict also has other costs of conflict associated.
Discussion
There are two key questions in this situation. First, who are the parties involved and what are the costs of conflict to each of the parties? Second, how was this conflict resolved?
Conflict introduces costs for all parties involved, whether these parties win or lose the conflict or it remains unresolved. An obvious example of costs of conflict is financial costs, for example costs of legal settlement of a conflict. Another financial cost is side-payments, or in other words money paid in order to resolve the conflict before it becomes more complex (such as buying a disputed patent). Parties can also have reputational damage, or damage to their personal or business reputation. Furthermore, conflict can have emotional costs to the participants. There is insufficient information to assess emotional costs, but there is clear evidence for financial and reputational cost for both parties.
The financial costs of the conflict have been generally disputed between the participants. Pao initially sued for $16 million, claiming lost wages and bonuses. While this claim was rejected, the parties also had outstanding claims for legal fees. Kleiner Perkins attempted to claim almost $973,000 in legal fees, but the judge rejected this claim and awarded only $276,000 in fees. (This does not include her own legal fees, which she will also be responsible for.) Thus, the financial costs to both parties were high, assuming that Kleiner Perkins' initial claim for legal fees was not exaggerated.
Both parties in this case are likely to have suffered reputational damage as well. Pao's claim was not unreasonable, given evidence for gender discrimination in the IT field, particularly in the world of venture capital. For example, one estimate shows that women hold only 11% of Silicon Valley executive roles, even worse than average compared to firms in other industries. Only an estimated 6% of venture capital partners are female, suggesting the problem is even worse in that industry. Furthermore, there is evidence that venture capitalists actually discriminate against female entrepreneurs as well. For example, one study showed that venture capitalists routinely selected entrepreneurial projects fronted by men over women, even when they were the same project. This preference seriously impedes female entrepreneurs, who struggle to achieve funding for their projects compared to male entrepreneurs. Kleiner Perkins is likely to have suffered reputational damage from the case, particularly given the revelations about the conduct of its senior partners (such as forcing romantic relationships on junior staff members and other inappropriate behavior). Pao is also likely to have suffered reputational damage, particularly as the case was brought as she was settling into a new role as CEO of Reddit.
Pao's initial case was rejected by a jury after several weeks of trial by Pao and others regarding the climate at Kleiner Perkins. Pao immediately appealed the ruling, but the appeal has not yet been heard. The only further resolution has been the award of legal fees. However, Kleiner Perkins has stated that it is still ready to settle the case with Pao.
There were, and continue to be, several opportunities for side-payments that could help reduce the extent and cost of conflict. Side-payments are payments offered by one of the parties in order to resolve the conflict, such as legal settlements, purchases of disputed patents, and so on. For example, Kleiner Perkins offered to settle the case for an undisclosed sum prior to the trial. The firm also offered after the closure of the trial to not file a claim for legal fees if Pao did not file an appeal in the case. This would have limited Pao's financial costs (though it would have exacerbated Kleiner Perkins'), but it would also have controlled reputational damage and continued potential financial costs for both parties. However, Pao rejected this proposal and filed an appeal in any case. Thus, efforts at resolution through side-payments failed at several points. There is no reason to consider that this would help further resolve the situation. Furthermore, Pao's continued actions suggest that the case will continue in court.
Kleiner Perkins can try to reduce the potential for a repeated occurrence of this type of conflict by introducing a healthy conflict culture into the organization. The organization's conflict culture is the approach used to resolve conflicts throughout the organization, and can be classified as collaborative, dominating, and avoidant, according to Gelfand, et al.. By cultivating a collaborative conflict culture, Kleiner Perkins could help ensure that in future, organizational problems are addressed within the organization and addressed in a more effective way. This could also help resolve some of the underlying conflicts of Pao's complaint, such as personal conflicts between staff members.
Conclusion
The case of Ellen Pao demonstrates that organizational conflict sometimes has a broader effect than simply within the boundaries of the organization. It is clear that both Pao and Kleiner Perkins had high costs associated with this conflict, including financial and reputational costs that would not have occurred had the resolution occurred at an earlier stage. For example, had Kleiner Perkins taken Pao's complaints seriously while she was working for the company, the lawsuit and its fallout could have been avoided. However, the case also has implications for the entire IT industry, which is known to have serious issues with gender discrimination and significant underrepresentation of women in senior roles. The Pao case brought this issue into the spotlight and demonstrated that it is a clear problem for the industry. Thus, the conflict may have positive effects despite the negative resolution for Kleiner Perkins and Pao.
Bibliography
Associated Press. Ellen Pao to appeal ruling in Silicon Valley gender discrimination suit.
Bosse, D. A., & Taylor, P. L. The second glass ceiling impedes women entrepreneurs. The Journal of Applied Management and Entrepreneurship, 17 (1), 52-68.
Brooks, A. W., Huang, L., Kearney, S. W., & Murray, F. E. Investors prefer entrepeneurial ventures pitched by attractive men. PNAS , 111 (12), 4427-4431.
Collins, T. Judge holds firm on Ellen Pao payment of $276,000 to Kleiner Perkins.
Corporate Ethics and Morality. Academic Research Business Study. Online. itchybrainscentral.com/example-essays/shell-oil-nigeria
Gelfand, M. J., Leslie, L. M., Keller, K., & de Dreu, C.. Conflict cultures in organizations: How leaders shape conflict cultures and their organization-level consequences. Journal of Applied Psychology , 97 (6), 1131-1147.
Inzlicht, M., Bartholow, B. D., & Hirsh, J. B. Emotional foundations of cognitive control. Trends in Cognitive Science , 19 (3), 126-132.
Kimbrough, E. O., & Sheremeta, R. M. Side-payments and the costs of conflict. International Journal of Industrial Organization , 31 (3), 278-286.
Kydd, A. H., & McManus, R. W. Threats and assurances in crisis bargaining. Journal of Conflict Resolution , Forthcoming.
Lipsky, D. B., Lamare, J., & Gupta, A. The effect of gender on awards in employment arbitration cases: The experience in the securities industry. Industrial Relations: A Journal of Economy and Society , 52 (a1), 314-342.
Neate, R. Ellen Pao gender discrimination trial grips Silicon Valley.
This essay discusses the costs of a recent business conflict and discusses how it was resolved. The conflict examined is the case of Ellen Pao, a former Silicon Valley venture capitalist who recently took on the position of CEO at Reddit, a popular online community. Pao filed a gender discrimination against her former organization, Kleiner Perkins Caulfield & Byers, a high-profile venture capital firm. The case was heard in March this year. During the case, Pao stated that she was excluded from important meetings, events, and other activities, and was passed over for promotion in favor of male employees more junior than herself. She also stated that she was subjected to sexual harassment after ending a forced affair with senior partner Ajit Nazre, and that this ultimately led to her firing. The firm rejected these claims, stating that she was fired for under-performance and poor interpersonal skills. The jury ruled against Pao, although she did file an appeal. The most recent development in the case was that Pao has been ordered to pay $276,000 in legal fees, about a quarter of the requested fees from Kleiner Perkins. Although this case has clear financial costs associated, each of the parties to the conflict also has other costs of conflict associated.
Discussion
There are two key questions in this situation. First, who are the parties involved and what are the costs of conflict to each of the parties? Second, how was this conflict resolved?THE COSTS OF CONFLICT
Conflict introduces costs for all parties involved, whether these parties win or lose the conflict or it remains unresolved. An obvious example of costs of conflict is financial costs, for example costs of legal settlement of a conflict. Another financial cost is side-payments, or in other words money paid in order to resolve the conflict before it becomes more complex (such as buying a disputed patent). Parties can also have reputational damage, or damage to their personal or business reputation. Furthermore, conflict can have emotional costs to the participants. There is insufficient information to assess emotional costs, but there is clear evidence for financial and reputational cost for both parties.
The financial costs of the conflict have been generally disputed between the participants. Pao initially sued for $16 million, claiming lost wages and bonuses. While this claim was rejected, the parties also had outstanding claims for legal fees. Kleiner Perkins attempted to claim almost $973,000 in legal fees, but the judge rejected this claim and awarded only $276,000 in fees. (This does not include her own legal fees, which she will also be responsible for.) Thus, the financial costs to both parties were high, assuming that Kleiner Perkins' initial claim for legal fees was not exaggerated.
Both parties in this case are likely to have suffered reputational damage as well. Pao's claim was not unreasonable, given evidence for gender discrimination in the IT field, particularly in the world of venture capital. For example, one estimate shows that women hold only 11% of Silicon Valley executive roles, even worse than average compared to firms in other industries. Only an estimated 6% of venture capital partners are female, suggesting the problem is even worse in that industry. Furthermore, there is evidence that venture capitalists actually discriminate against female entrepreneurs as well. For example, one study showed that venture capitalists routinely selected entrepreneurial projects fronted by men over women, even when they were the same project. This preference seriously impedes female entrepreneurs, who struggle to achieve funding for their projects compared to male entrepreneurs. Kleiner Perkins is likely to have suffered reputational damage from the case, particularly given the revelations about the conduct of its senior partners (such as forcing romantic relationships on junior staff members and other inappropriate behavior). Pao is also likely to have suffered reputational damage, particularly as the case was brought as she was settling into a new role as CEO of Reddit.
RESOLUTION STRATEGIES
Pao's initial case was rejected by a jury after several weeks of trial by Pao and others regarding the climate at Kleiner Perkins. Pao immediately appealed the ruling, but the appeal has not yet been heard. The only further resolution has been the award of legal fees. However, Kleiner Perkins has stated that it is still ready to settle the case with Pao.
There were, and continue to be, several opportunities for side-payments that could help reduce the extent and cost of conflict. Side-payments are payments offered by one of the parties in order to resolve the conflict, such as legal settlements, purchases of disputed patents, and so on. For example, Kleiner Perkins offered to settle the case for an undisclosed sum prior to the trial. The firm also offered after the closure of the trial to not file a claim for legal fees if Pao did not file an appeal in the case. This would have limited Pao's financial costs (though it would have exacerbated Kleiner Perkins'), but it would also have controlled reputational damage and continued potential financial costs for both parties. However, Pao rejected this proposal and filed an appeal in any case. Thus, efforts at resolution through side-payments failed at several points. There is no reason to consider that this would help further resolve the situation. Furthermore, Pao's continued actions suggest that the case will continue in court.
Kleiner Perkins can try to reduce the potential for a repeated occurrence of this type of conflict by introducing a healthy conflict culture into the organization. The organization's conflict culture is the approach used to resolve conflicts throughout the organization, and can be classified as collaborative, dominating, and avoidant, according to Gelfand, et al.. By cultivating a collaborative conflict culture, Kleiner Perkins could help ensure that in future, organizational problems are addressed within the organization and addressed in a more effective way. This could also help resolve some of the underlying conflicts of Pao's complaint, such as personal conflicts between staff members.
Conclusion
The case of Ellen Pao demonstrates that organizational conflict sometimes has a broader effect than simply within the boundaries of the organization. It is clear that both Pao and Kleiner Perkins had high costs associated with this conflict, including financial and reputational costs that would not have occurred had the resolution occurred at an earlier stage. For example, had Kleiner Perkins taken Pao's complaints seriously while she was working for the company, the lawsuit and its fallout could have been avoided. However, the case also has implications for the entire IT industry, which is known to have serious issues with gender discrimination and significant underrepresentation of women in senior roles. The Pao case brought this issue into the spotlight and demonstrated that it is a clear problem for the industry. Thus, the conflict may have positive effects despite the negative resolution for Kleiner Perkins and Pao.
Bibliography
Associated Press. Ellen Pao to appeal ruling in Silicon Valley gender discrimination suit.
Bosse, D. A., & Taylor, P. L. The second glass ceiling impedes women entrepreneurs. The Journal of Applied Management and Entrepreneurship, 17 (1), 52-68.
Brooks, A. W., Huang, L., Kearney, S. W., & Murray, F. E. Investors prefer entrepeneurial ventures pitched by attractive men. PNAS , 111 (12), 4427-4431.
Collins, T. Judge holds firm on Ellen Pao payment of $276,000 to Kleiner Perkins.
Corporate Ethics and Morality. Academic Research Business Study. Online. itchybrainscentral.com/example-essays/shell-oil-nigeria
Gelfand, M. J., Leslie, L. M., Keller, K., & de Dreu, C.. Conflict cultures in organizations: How leaders shape conflict cultures and their organization-level consequences. Journal of Applied Psychology , 97 (6), 1131-1147.
Inzlicht, M., Bartholow, B. D., & Hirsh, J. B. Emotional foundations of cognitive control. Trends in Cognitive Science , 19 (3), 126-132.
Kimbrough, E. O., & Sheremeta, R. M. Side-payments and the costs of conflict. International Journal of Industrial Organization , 31 (3), 278-286.
Kydd, A. H., & McManus, R. W. Threats and assurances in crisis bargaining. Journal of Conflict Resolution , Forthcoming.
Lipsky, D. B., Lamare, J., & Gupta, A. The effect of gender on awards in employment arbitration cases: The experience in the securities industry. Industrial Relations: A Journal of Economy and Society , 52 (a1), 314-342.
Neate, R. Ellen Pao gender discrimination trial grips Silicon Valley.