The Cost of Conflict

Conflict is defined as a difference of values wants, needs, or expectations. The workplace is filled with people who have diverse values, wants, needs, and expectations. So, naturally, conflicts will occur. These conflicts can be an asset to the organization. They may be opportunities for creativity, collaboration, and improvement.

However, dealt with destructively, conflict can also be costly to an organization. The trouble isn't necessarily the fact that conflict exists. It's how we deal with those conflicts or what happens when they aren't resolved. The impact of conflict in the workplace can be devastating - to the individuals involved, to colleagues and teams, to clients, and to the business as a whole, and to the organization as a whole. Some of the results of unresolved conflict in the workplace include:

• Stress, frustration, and anxiety
• Loss of sleep
• Strained relationships
• Presenteeism
• Employee turnover
• Loss of productivity
• Increased client complaints
• Absenteeism
• Sabotage
• Injury and accidents
• Disability claims
• Sick leave

These symptoms of unresolved conflict are a significant cost factor in Departments. Please review, the following facts and figures below. How much is conflict costing your organization?

Mental Health/Stress
"Unresolved conflict represents the largest reducible cost in many businesses, yet it remains largely unrecognized." (Dana, Daniel (1999). Measuring the Financial Cost of Organizational Conflict. MTI Publications and Slaikev, K. and Hasson, R. (1998). Controlling the Cost of Conflict. Jossey-Bass)

"Employees in high pressure/low control situations or high effort/low reward situations have much greater risks to their physical and mental well being. (Tangri, Ravi, Stress Costs - Stress Cures: How to recover productivity lost to stress, 2003.)

"The number of employees seeking help for work-related conflict has increased from 23 percent in 1999 to close to 30 percent in 2001." (WarrenShepel, Workplace Trends Linked to Mental Health Crisis in Canada, 2002)

A 2005 UK survey by Roffey Park found that "78% of managers are suffering from work-related stress, 52% have experienced harassment, 46% have seen an increase in conflict at work." (Roffey Park [online], Failure to manage change heightens stress, harassment and conflict at work, survey reveals, Jan. 05)

"The total value of lost work time due to stress is estimated to be $1.7 billion. (WarrenShepel [online], Health & Wellness Research Database, 2005)

"Employees who rate their managers as "sensitive" miss an estimated 3.7 days of work, wheras employees whose managers are rates as "non-sensitive" miss approximately 6.2 days of work. (MacBriade-King, J.L., and Bachmann, K. Solutions for the stressed-out worker. The Conference Board of Canada,1999)

An estimated 16% of employees feel that poor interpersonal relations are a source of stress at work. (WarrenShepel [online],Health & Wellness Research Database, 2005)

Grievances/Litigation
"The number of employees seeking help for harassment has almost tripled from 1999 to 2001." (WarrenShepel [online], Health & Wellness Research Database, 2005)

"The math isn't complicated. A complaint that escalates to a lawsuit can easily cost $50 000 to $100 000 and take three to five years to settle. It doesn't stop there. (Taylor, Robin,Workplace tiffs boosting demand for mediators. National Post Mar. 17/03)

"In the case of harassment, the number of employees seeking help almost tripled between 1999 and 2001. Add absenteeism, employee theft, sabotage, not to mention the cost of employee turnover (estimated to be as much as 75% to 150% of base salary) and it is understandable why companies are paying attention."(Taylor, Robin,Workplace tiffs boosting demand for mediators. National Post Mar. 17/03)

A 2005 UK survey of managers by Roffey Park found that "52% have experienced harassment." (Roffey Park [online], Failure to manage change heightens stress, harassment and conflict at work, survey reveals, Jan. 05)

"Sexual harassment is associated with more conflict in work teams, less cohesion and less success in meeting financial goals, " (Kleiman, Carol, Harrassment bad for bottom line, study finds. The Ottawa Citizen: Wednesday Sept. 7/05)

"According to a nationwide study, the average jury verdict in wrongful termination cases is over $600 00 and companies lose 64% of the cases." (Bureau of National Affairs, Without Just Cause: An Employer's Practical Guide on Wrongful Discharge, 1998)

In the United States an average of 2 years are required for the Equal Employment Opportunity Commission to investigate most claims. (Busch, R II, The Conundrum: Conflict - The Solution: Designing Effective Conflict Management Systems, 16 Preventative L. Rep. 1997)

"Corporations that have developed collaborative conflict management systems report significant litigation cost savings: Brown and Root reported and 80% reduction in outside litigation costs, Motorola reported a 75% reduction over a period of six years, NCR reported a 50% reduction and a drop of pending lawsuits from 263 in 1984 to 28 in 1993" (Ford, John, Workplace Conflict: Facts and Figures, [online] Mediate.com website, July 2000)

Presenteeism
"Another set of problems may occur when employees with high intent to turnover do not leave the organization. Such employees tend to have lower commitment, be more dissatisfied with their jobs and reduce morale in the area in which they work. Many such employees" retire on the job" (ie. Do not do their share of the work) which causes workload problems for others in their area." (Duxbury & Higgins, Work-Life Conflict in Canada in the New Millenium: A status Report, 2003]

"The rate of 'presenteesim' is estimated to be as much as three time higher than absenteeism."(WarrenShepel [online], Health & Wellness Research Database, 2005)
Employee loss / turnover

"Chronic unresolved conflict acts as a decisive factor in at least 50% of departures. Conflict accounts for up to 90% of involuntary departures, with the possible exception of staff reductions due to downsizing and restructuring." (Dana, Dan, [online] The Dana Measure of Financial Cost of Organizational Conflict, 2001)

"No matter what the cause, turnover has a number of undesirable implications for organizations, including the costs of losing an experienced worker, recruiting and retraining a successor (retraining is estimated to cost 1.5 times the employee's annual salary), the lower productivity of a new worker, and secondary morale effects on managers, peers and subordinates." (Duxbury & Higgins, Work-Life Conflict in Canada in the New Millenium: A status Report, 2003)

The turnover costs for an employee is anywhere between 75% and 150% of the annual salary. (Phillips, D.T. The Price Tag of Turnover. Personnel Journal, Dec. 1990, at p 58, 1990)

"A team-member's commitment to the team and the team mission can decrease if intra-team conflict remains unresolved. ...if unhealthy conflict goes unresolved for too long, team members are likely to leave the company or use valuable time to search for alternatives." (Barnes-Slater, Synthia and Ford, John,[online] MGH Consulting,Measuring Conflict: Both The Hidden Costs and the Benefits of Cofnlict Management Interventions, LawMemo.com, 2005)
Loss of Productivity/Wasted Time

"Tension and stress reduce motivation and disturb concentration. A loss of simple productivity of 25% (doing things other than work related activities, such as discussing the dispute, playing computer games, finding reasons to get out of the area) reduces an average work week to fewer than 20 hours...)" (Cram, James A. and MacWilliams, Richard K.[online] The Cost of Conflict in the Workplace, Cramby River Consultants, date unknown)

42% of a Manager's Time is spent addressing conflict in the workplace. (Watson, C & Hoffman, R, Managers as Negotiators, Leadership Quarterly 7(1), 1996)

"I've had CEOs and senior vice presidents tell me they can spend up to 70% of their time on conflict..." (Taylor, Robin,Workplace tiffs boosting demand for mediators. National Post Mar. 17/03)

"Fortune 500 Senior Executives spend 20% of their time in litigation related activities." (Levine, Stewart, The Many Costs of Conflict, Mediate.com website, 1998)

"Over 65% of performance problems result from strained relationships between employees, not from deficits in individual employee's skill or motivation." (Dana, Dan, [online] The Dana Measure of Financial Cost of Organizational Conflict, 2001)

Up to 30% of a typical managers time is spent dealing with conflict. (Thomas, K and Schmidt, W. A survey of managerial interests with respect to conflict. Academy of Management Journal, June 1976.)

A 1996 study demonstrated that 42% of a manager's time is spent on conflict related negotiations. (Watson, C and Hoffman, R, Managers as Negotiators, Leadership Quarterly 7 (1) 1996.)

Absenteeism
In a study of 50 000 Canadian employees nationwide Health Canada found that "the greater the number of sources of stress reported in the social environment at work, the greater the likelihood of reporting more than 10 days off as a result of ill health."(Health Canada, Workplace Health System, no.3, 1998)

"Employees who report the following sources of stress are more likely than others to be absent for six or more days...interpersonal relations; job control; and management practices" (Health Canada, Canadian Fitness and Lifestyle Research Institute. Workplace Health System, no.3.1998)

The cost of employee absence alone [in Canada] is approximately $8.6 billion. (The Health Communication Unit [online], The Case for Comprehensive Workplace health Promotion: Making "Cents" of a Good Idea, date unknown)

Other consequences of increased conflict-related stresses include greater incidence of substance abuse, heart problems, back problems, cancers, mental health problems, greater incidence of workplace injury and much higher incidence of interpersonal conflict. (Health Canada, Best Advice on Stress Risk Management in the Workplace, 2000).

"Bullied employees take, on average, seven days per year more sick leave than others." (Knight, Julian, Bullied workers suffer 'battle stress". BBC News Online, Tuesday Aug. 04)

Sabotage
"Studies reveal a direct correlation between prevalence of employee conflict and the amount of damage and theft of inventory and equipment. And, covert sabotage of work processes and of management's efforts usually occurs when employees are angry at their employer." (Dana, Dan, [online] The Dana Measure of Financial Cost of Organizational Conflict, 2001)

Physical Injury / Accidents
"There is increasing evidence that psychosocial factors relating to the job and work environment play a role in the development of work-related musculoskeletal disorder of the upper extremity and back." (Musculoskeletal Disorders and Workplace Factors: A Critical Review of Epidemiologic Evidence for Work-Related musculoskeletal Disorders of the Neck, Upper Extremity, and Low Back, National Institute of Occupational Safety and Health, July 1992)

"It is accepted and proven that errors lead to accidents and that stress can lead to errors. It follows logically, therefore, that stress must also contribute to accident causation." (Nguyen, Lieu, Bibbings, Roger, Exploring the links between stress and accidents in the workplace: a literature review. Journal of the Institution of Occupational Safety and Health, Vol. 6(2) December 2002 p.9-20)

Disability Costs
"...depression and high stress were found to have the greatest impact on worker health care costs., increasing these costs more than obesity, smoking or high blood pressure. In fact, these cost were 46% higher for workers who felt they were under a lot of stress." (The Health Communication Unit [online], The Case for Comprehensive Workplace health Promotion: Making "Cents" of a Good Idea, date unknown.)

"Workplace stress and work-related conflict are among the top eight reasons why employees request counseling assistance." (Warren Shepel, Workplace Trends Linked to Mental Health Crisis in Canada, 2002)

"Job stress is a key driver of health care costs. According to the Journal of Occupational Environmental Medicine, health care expenditures are nearly 50 percent greater for workers reporting high levels of stress."(Corbitt Clark, Mary, [online], The Cost of Job Stress, mediate.com)

Workplace Violence / Bullying
"There is a drastic increase in the severity of work-related issues with workplace violence and work-related conflict contributing the greatest increases." (Warren Shepel, Workplace Trends Linked to Mental Health Crisis in Canada, 2002)

"Dr. Tehrani conducted a study of 165 professionals in the caring sector such as nurses and social workers. Dr. Tehrani found that 36% of the men and 42% of the women reported having experienced bullying."(Knight, Julian, Bullied workers suffer 'battle stress". BBC News Online, Tuesday Aug. 04)

Community/Family Harm
"Conflict is a good example of how harm can be produced in the workplace and of how this harm "spills over" into families and communities." Such harm includes both inner-directed harm (suicidal behavior, recklessness, agitated depression and abuse of alcohol, drugs) and outer-directed expressions (threatening behaviour, emotional and/or verbal abuse, bullying, harassment, assault, domestic violence, road rage). (Health Canada, Best Advice on Stress Risk Management in the Workplace, 2000, pp 15-16.)

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