The Costs of Unresolved Conflict

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“Unmanaged conflict is the largest reducible cost in organisations today, and the least recognized” – Slaiker & Hasson.

Here are the two primary effects of unmanaged or unrecognised conflict at work:

  1. Direct (visible) costs:
    1. Increase in absenteeism for personal reasons: paying the absent worker and the replacement labour and drop in productivity/failure to meet targets PLUS increased use of medical benefits. (The Canadian economy lost an estimated $16.6 billion in 2012 due to absenteeism, according to a study by the Conference Board of Canada.)
    2. Replacement costs of employees who resign as a result of the conflict or the general poisonous atmosphere at work (recruitment, orientation, on-the-job training, time to integrate new employee into the team/department).
    3. Grievance & arbitration initiated by affected employees/union: Management time, time off for shop stewards, legal costs, arbitration costs.
  2. Indirect (hidden) costs:
    1. Loss of skill and organisational memory when someone resigns.
    2. Employees’ work-time spent on fueling the conflict/gossiping vs. working productively.
    3. Poisonous work atmosphere causing tension, stress, sabotage of others’ work, lack of co-operation, withholding of needed information.
    4. Opportunity costs: loss of productivity, deterioration in customer relations.
    5. Loss of reputation.

Psychometrics Canada found in their study on conflict in the Canadian workplace that the most common causes of workplace conflict were:

  • Personality and ego clashes (86%),
  • Poor leadership (73%),
  • Lack of honesty (67%),
  • Stress (64%) and
  • Clashing values (59%).

The study describes negative outcomes of conflict as:

  • Quitting (81%),
  • Sick absence/absenteeism for personal reasons (77%),
  • Personal insults and attacks (76%),
  • Dismissal (43%).

I’ve always believed that conflict, managed well, is a great source of information on what needs to be fixed or fine-tuned. I’ve also had the experience of seeing improved relationships and co-operation as people who work together get to understand each other better. And so I was happy to see the study report the following POSITIVE OUTCOMES from well managed conflict:

  • Better understanding of others (77%),
  • Better solutions to problems and challenges (57%),
  • Higher team performance (40%),
  • Increased motivation (31%), and
  • Major innovations (21%).

What to do?

The employees, managers and business owners who participated in the study recommend that business owners/managers should do the following:

  • Model appropriate behaviours (84%),
  • Provide more clarity to employees regarding your expectations (77%), and
  • Manage toxic individuals more firmly (75%).

Where to begin? There are only so many hours in the day!   In any business the management of relationships with people – whether they are employees, suppliers or customers – is critical to one’s success. As much as your business may be roaring ahead successfully or battling under the strained economic conditions that prevail at present, the smart money is on the business owner/manager who takes time to work on this aspect of the business.

Good workplace dynamics is the swing vote in taking your business to the next level.

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  1. Joan on October 14, 2014 at 11:10 pm

    I work for a medium sized company of about 300-400 employees in my office. The department I’m in has around 130 people in it. I deal directly on a day to day basis with 25-30 of those. It is a sales department and most people talk a lot. Sales is like herding cats at the best of times, but all the people I work with get along with each other. We do a lot of exercises together to help build team mojo. All the exercises are extremly fun so you laugh together. Even our training courses are team building events. I am quite surprised that there aren’t any conflicts with egos but it is very professional and courtious place to work. I have worked in places where jelousy and conflicts were and I far prefer working at a company that makes ya laugh and play together sometimes

    • Delphine on October 15, 2014 at 12:53 am

      It sounds like your company is doing something right. Seems like a place to hold on to!

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