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The Hidden Costs of Workplace Conflict

What has conflict cost you? We take a closer look at the deeper impact conflict can have on an organization and it's stakeholders.


In the world of business, conflict is often seen as a negative force that can disrupt harmony and hinder progress. While it's true that conflict can create tension, it also carries a significant impact on both organizational performance and financial health.


Here are some of the hidden costs of conflict that can take a toll on a businesses from both a performance and monetary standpoint.


Productivity

When conflict rears its head in a workplace, productivity takes a hit. Team members may become distracted, lose focus on tasks, or even engage in passive-aggressive behaviors, affecting overall performance.


According to a study by CPP Inc., 85% of employees report dealing with conflict at some level in the workplace, and of those, 29% say it leads to decreased efficiency and productivity. (Source: CPP Global Human Capital Report).


Team Morale

Conflict can also damage team morale and collaboration. A strained work environment may discourage open communication and foster a culture of fear, preventing the free exchange of ideas. Consequently, creativity and innovation suffer, hampering an organization's ability to adapt and stay competitive in a rapidly changing marketplace.


According to the same CPP Inc. study, as many as 89% of employees report that they allow conflict to escalate before addressing it. This results in a tangible organizational cultural decline due to ongoing and pervasive conflict going unaddressed and ignored for long periods of time.


Revenues

Beyond its effects on performance, conflict also exacts a toll on an organization's bottom line. One of the most significant monetary costs of conflict lies in employee turnover. A study conducted by the Society for Human Resource Management (SHRM) estimates that replacing an employee can cost an organization 50% to 60% of their annual salary. (Source: SHRM Human Capital Benchmarking Report).


Decreased performance as a result of conflict costs U.S. based businesses a staggering $359B annually in lost revenue (Source: CPP Global Human Capital Report).


Attrition and Retention

Conflict can lead to an increase in absenteeism and sick leave, resulting in reduced manpower and added pressure on remaining employees. Many employees resort to utilizing accrued time off to avoid conflicts in the workplace.


A report by the Harvard Business Review states that 25% of employees surveyed believe that avoiding workplace conflict led to sickness or absenteeism, ultimately impacting organizational performance. (Source: Harvard Business Review).


According to the American Psychological Association, workplace stress resulting from unresolved conflicts costs employers an estimated $500 billion annually in the United States. (Source: American Psychological Association)


Legal Liability

Conflict can also escalate into legal battles and lawsuits, driving up legal expenses, and causing significant reputational damage.


According to the EEOC, the most common complaints made against U.S. businesses included retaliation and discrimination which includes workplace harassment ( Source: Equal Employment Opportunity Commision).


The payouts from those civil suits and settlements can range from 10's of thousands of dollars to millions of dollars in punitive and compensatory damages.


As leaders, it is essential to recognize that conflict carries a substantial hidden cost for organizations. Addressing conflict proactively and creating a culture that promotes open communication, empathy, and conflict resolution skills can save businesses from the dire consequences of unresolved disputes.


By investing in conflict management training, fostering a positive work environment, and promoting healthy team dynamics, organizations can navigate challenges with finesse and achieve sustainable success.


About Conflictish™

At Conflictish™, we are workplace conflict coaches who specialize in partnering with organizations to coach & equip their key leaders who have demonstrated conflict-causing behaviors that have negatively impacted them, their teams, and their organizations.


From high-conflict personalities and poor communicators to under-equipped leaders and those demonstrating inappropriate behaviors, we provide coaching and training directed at helping leaders to improve their conflict competency by developing their character along with their leadership skills, thereby minimizing losses and harm to the organization.


If you or your organization is interested in learning more about our coaching and training services, email info@Conflictish.com to setup a discovery call today!


References:

  1. CPP Global Human Capital Report. (https://www.cpp.com/pdfs/CPP_Global_Human_Capital_Report.pdf)

  2. SHRM Human Capital Benchmarking Report. (https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/pages/human-capital-benchmarking-report.aspx)

  3. American Psychological Association. (https://www.apa.org/news/press/releases/stress/2014/stress-report.pdf)

  4. Harvard Business Review. (https://hbr.org/2020/03/does-avoiding-conflict-reduce-stress-and-absenteeism)

  5. Equal Employment Opportunity Commission (https://www.eeoc.gov/newsroom/eeoc-releases-fiscal-year-2020-enforcement-and-litigation-data)


 

Ryan Dunlap is a conflict strategist and the founder of Conflictish, a conflict strategy consultancy that specializes in workplace conflict and sexual misconduct. From tarnished rapport to squeamish conversations, Conflictish is on a mission to help leaders get their 'ish together.

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