The Real Cost of Workplace Conflict: What Employers Need to Know!

Gallup’s 2008 study entitled “State of the American Workplace” and another by the Consulting Psychologist Press on “Workplace Conflict and How Businesses Can Harness It To Thrive” revealed some startling facts that caused American businesses to stand up and take notice.   Here are the top five reasons for workplace conflict…

  1. personality clashes – 49%
  2. stress – 34%
  3. workload – 33%
  4. poor leadership – 29%
  5. lack of honesty – 26%

    And, here are a few more alarming stats:

  • 25 percent of employees said that avoiding conflict led to sickness or absence from work.
  • Nearly 10 percent reported that workplace conflict led to project failure.
  • More than one-third said that conflict resulted in someone leaving the company, either through firing or quitting.
  • Replacing an employee costs 150 to 200 percent more than that employee’s salary and benefits. Losing even a mid-level employee making $30,000 a year could cost your company $70,000 or more to replace.

    Oftentimes, conflicts between people are less overt, such as subtle forms of harassment or bullying. “Subtle harassment and bullying is a systems problem often supported unknowingly by management” which is in direct conflict with California laws AB 1825 and AB 2053!

So, what can be done about it?

  • Hire SMART to avoid conflict. Ask good questions to identify the “one person who causes conflict” BEFORE hiring.
  • Take a look at your organization’s culture. How might it actually encourage conflict by how it’s set up and who is leading. This is the first step towards fixing it.
  • Change is possible if senior leadership is absolutely committed to making changes.
  • Real conversations about the desired cultural norms are a MUST and steps implemented on how to embrace people’s differences.

These types of conversations take time, energy and effort–but compared to the real costs of workplace conflict, finding healthy resolutions is a both-gain situation for everyone.

Consulting Psychology Press, Inc. (2008) found that U.S. employees spend 2.8 hours per week dealing with conflict. While this amount of time might not seem like much, the cost of this lost time is staggering!  Based on an average hourly wage of $17.95, this amounts to $359 billion in paid hours, or the equivalent of 385 million working days, across the nation.  Simply speaking, this is $50.96 per week per employee, or $2,613.20 per year.  Again, this may not sound like much but if you have ten employees in your organization embroiled in conflict, this is costing you $26,132.00 per year. And, if left untouched, this increases to $130,676 over a five year period.  I don’t know about you but $100K+ is a lot of money to lose in an organization with nothing productive to show for it.

You might say, 2.8 hours…so what?  Well, this is time not spent doing the job employees were hired to do.  Instead, it is time gossiping, protecting turf, retaliating, getting people to take sides, planning defenses, navigating around the drama and taking up time from management.   Talk about a management nightmare!  Is this how you want to live your work life?

So, what can employers do?  Time and time again, five key factors emerge:

  • We can no longer afford to ignore personality clashes…it is just too costly.  A  quick workplace climate study is the best place to start.
  • Work on building a workplace culture where each and every employee, at EVERY level, is held accountable for addressing conflict at the earliest level possible. This means teaching them effective communication and conflict management skills.
  • Look at differences in communication and conflict management styles, particularly at the leadership levels. Teach people to deal with generational and cultural differences, values and approaches to communication. Educate people around gender differences (yes, men and women DO communicate differently).
  • Hire the right managers! Too often, people get promoted based on technical skills or rewards in their career path, not for their people management skills.  These types of managers unintentionally become our “bad bosses”  who erode morale, create legal risks, and cause good employees to leave good organizations.
  • Invest in leadership management for developing effective people management skills.  AND, hold managers accountable for a motivated and efficient workforce is the best way for making miserable employees not so miserable. Transform bad bosses into good bosses by equipping them with the skills to lead employees in ways that increase retention, revenues and rewards for the company.  Developing action plans that involve training, coaching and follow-up ensures that managers achieve this while turning around profitability.

About the author:  This article was first published in April 2014 at www.relationships-at-work.com  by Dr. Debra Dupree, Workplace Psychologist and Mediator.  Dr. Deb’s 2014 doctoral dissertation addressed the Psychology of Good Bosses vs. Bad Bosses, what leads to bad bossing, the impact on employees, and what can be done about it.  As this article suggests, the disruption of workplace conflict is significant and the potential to give rise to harassment in the workplace and abusive conduct is real.  We revisit this issue as we are in a year of compliance for manager and supervisor training required by two California laws, AB 1825 (2004) and AB 2053 (2014), for employers with 50 or more employees.  Take action now and contact Dr. Dupree at 1-800-743-1973 or dr.dupree@relationships-at-work.com to be in compliance and stop bad behavior from ruining your organization!