A common pattern is to assign different domains to different people. Maybe you divide by function, like sales versus product management. Maybe you divide by territory, like Northeast and Midwest. Maybe you divide by product line. Then you set goals and incentives appropriate to each person’s domain. This works great. That is until you need these individuals to cooperate.

Remember how you gave them separate goals and separate incentives? You just guaranteed that they will find it difficult to agree. Client Services wants to increase customer satisfaction. Sales wants to squeeze out more revenue. When there’s an initiative that increases revenue but makes customers unhappy, how do you expect your heads of Client Services and Sales to work it out? Yes, you can ask them to look past their incentives and do what’s best for the company as a whole, and, if you hired and managed well, they will.

Conflict escalation is of course part of being the boss. You can solve this problem by overruling one of them. But you created a conflict that will make agreement harder and less frequent. You can make the decision, but you’re not getting agreement and buy-in. One of those people or groups is going to resent you for taking something away from them, and they should. This is entirely a consequence of your choices. You gave them goals and then contradicted yourself. Over the long run, incentivizing conflict will sour relationships and cause organizational dysfunction.

What you need to do instead is to set up responsibilities to internalize the differing goals. You want to push the trade-offs into one person’s head, ideally as low in the organization as you can. Where you need to split responsibilities, give similar goals to parties that need to cooperate. Then it’s not one person’s loss versus the other person’s gain. It’s one person having to deal with a gain and a loss and the other person having to deal with a similar gain and a similar loss. They will each have to make more complicated decisions, but you’ll incentivize cooperation not conflict.