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Finding balance in business

Finding balance in business: Three steps for leveraging competing demands to your advantage

Increasingly, organizations - and the individuals working for them - face institutional complexity, situations in which conflicting social demands on their goals and actions clash. Think: Cost-efficient healthcare, social entrepreneurship, or work-life balance. Our year-long “fly on the wall” study of reinsurance trading in Lloyd’s of London reveals three steps to avoid “either-or” trade-offs, balance conflicting demands, and create performance-enhancing complementarities between them. The key, it takes all three!

Lloyd’s reinsurance underwriters skilfully balance competing demands on their work: They compete to increase market share and profits for their companies, but maintain friendly ties with the very Lloyd’s members they compete against. Importantly, doing so makes successful underwriters both better competitors and more valued members of the community.

This balancing act hinges on underwriters’ ability to prioritize demands of either market or community, as any specific situation requires. They can do so, because they do not rely on organizational structures to manage competing demands. Those structures would be too static. Instead, they manage institutional complexity individually, in their daily practice, by mastering three balancing mechanisms: segmenting, bridging and demarcating.

They segment their work between different locations, doing “market” analysis in their office and “community” work among their Lloyd’s peers on the trading floor, to reduce conflict between different stakeholders and their respective demands. Underwriters can then bridge the two when using community gossip in their analysis or weighting their market analysis to protect community relationships, allowing both to inform and positively feed off each other. Bridging, however, risks that underwriters lose sight of their accountability to their company or peers over time and “slip” towards over-privileging the other. To protect against such slippage, they demarcate both sets of demands and artificially re-assert the potential conflict between them.

Our model explains how individuals, rather than organizations, can flexibly manage tensions between competing demands. Critically, to do so, all three mechanisms must be used together. Otherwise you fail to create valuable complementarities or risk over-privileging one set of demands (e.g. profit) over another (e.g. public service), as seen in recent scandals.

Read the online and published research

Read the abstract on the Academy of Management Journal (AMJ) website, published online April 2014.

Download the manuscript accepted for publication in the Academy of Management Journal.

Video

Media mentions

"How to balance competiting stakeholder demands" IEDP.com
"Leaders Need A Clear Model For Dealing With Competing Demands Within Their Organizations" Forbes
"Academics use lessons from Lloyds of London to develop new business model" CCRmagazine.com
"Rules alone will not stop bad behaviour" Financial Times
"Oxford and Cass academics explain how lessons from Lloyd's of London help organisations end tensions between profits and wider responsibilities to stakeholders" Digital Journal

Research outputs

"Charting new territory for organizational ethnolography: Insights from a team-based video ethnography" Download PDF
"Getting Institutional Work to Work: Generating Actionable Insights from a Practice-Approach to Institutional Ambidexterity" Download PDF
"Material Artefacts: Practices for Doing Strategy with ‘Stuff’"

Download PDF

Download from ScienceDirect

"Beyond Borders: Charting the Changing Global Reinsurance Landscape" Download PDF
"Trading Risks: The Value of Relationships, Models and Face-to-face Interaction in the Global Reinsurance Market" Download PDF

Contact

Download the poster

SBS authors

Michael Smets, Associate Professor in Management and Organisational Studies

Other authors

Paula Jarzabkowski, Cass Business School

Gary T. Burke, Aston Business School

Paul Spee, UQ Business School, Queensland 

Collaborators

Funders

Economic & Social Research Council

Insurance Intellectual Capital Initiative (IICI)

British Academy of Management