The cost of conflict in business

?Welcome back to the Growing Leaders in Business newsletter!??

In this edition, we’re tackling a topic that costs UK businesses a staggering ￡28.5 billion per year: conflict in the workplace.?

It’s no secret that workplace conflict affects more than just morale. It’s a drain on financial resources, the health and well-being of employees, and overall productivity. Yet, with the right tools and strategies, these costs can be avoided, and businesses can turn conflict into an opportunity for growth.?

Let’s break it down and explore the real impact of conflict—and what you can do about it.?

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The Financial Cost of Conflict?

Conflict doesn’t just happen – it doesn’t go away; it costs. And it costs big.?

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Turnover and Recruitment Costs:

It’s easy to ignore at first, and to put it in the “too hard to deal with box”.?? But that is a mistake.? Because, when unresolved conflicts escalate, the workplace is so toxic that it often results in employees leaving. Replacing people is expensive, with costs of recruitment, onboarding, lack of productivity, and lost knowledge having a massive impact on profits.?? And, if the approach to conflict isn’t resolved, it will cycle back around and start all over again, repeating those costs time after time. ??

- Sickness Absence:

Around 9% of employees take time off work due to stress, anxiety, and depression caused by workplace conflict, contributing to 15 million lost days annually in the UK.

If you take a moment to consider what 9% of your workforce costs are and think about what would happen if you were to just throw that money down the drain.? That’s what’s happening here.? If we can reduce conflict, we can make the workplace a safer, healthier place to be, therefore more productive and profitable for business.

Conflict Resolution Expenses:

According to SHRM (Society for Human Resource Management), resolving workplace conflict costs businesses an average of $12,000 per incident—from mediation to arbitration and legal fees.?

The longer conflicts are left unresolved, the more these costs snowball, eating into profits and resources that could be better spent elsewhere.?

Investing in skills to deal with conflict properly will give your business the opportunity to cut this issue off at the first inkling of problems, deal with issues empathetically, and effectively before they grow huge, and reduce the long-term costs.

Health and Wellbeing: The Hidden Toll?

Conflict in the workplace doesn’t just cost money; it impacts the long-term mental and physical health of employees:?

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-Stress and Anxiety: When conflict goes unresolved, employees often experience heightened stress and anxiety levels.?

- Burnout and Sickness: Workplace stress linked to conflict contributes to absenteeism, with employees feeling too overwhelmed or unwell to work effectively.?

- Low Morale: Employees involved in the conflict—or simply witnessing it—can become unhappy and disengaged, leading to a toxic workplace culture.?

These elements reduce resilience, the ability to confidently make bold decisions in the business, and create a “minimum effort” approach to work.? This will change the culture in your business negatively and therefore the future of your business success.

Addressing conflict proactively improves employee well-being, creating a supportive environment where people feel respected, valued, and energised.? It will mean that people feel safe, and confident to give their all and feel part of the team.? This means that they will work more collaboratively, productively, and proficiently.

The Productivity Drain?

When employees are embroiled in conflict, their focus shifts away from work, leading to:?

- Lack of Motivation: Employees distracted by unresolved issues may feel apathetic or uninspired, which reduces output.?

- Apathy and Presenteeism: Employees may show up to work physically but fail to fully engage mentally, resulting in less effective work.?

- Communication Breakdowns: Poor collaboration and unspoken tensions lead to inefficiency and missed opportunities for innovation.?

According to research, conflict-related productivity losses cost businesses ￡589 million annually in the UK alone.?

Turning Conflict into an Opportunity?

Fortunately, workplace conflict doesn’t have to be disruptive or costly. With the right conflict resolution strategies, businesses can:?

- Resolve Issues Faster: Addressing conflicts early prevents them from escalating and reduces the time employees spend dealing with unresolved tensions.?

- Improve Employee Morale: Proactive conflict management creates a culture of respect, trust, and collaboration, leaving employees feeling valued and motivated.?

- Streamline Operations: Conflict resolution training teaches skills like active listening, open communication, and collaboration—traits that boost leadership effectiveness and team productivity.?

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By investing in conflict resolution training and programmes, businesses can transform workplace dynamics and reclaim the energy and focus lost to unnecessary disputes.?

Why Now Is the Time to Act?

With rising costs and turnover rates, no business can afford to ignore the impact of workplace conflict. Addressing these issues now will not only reduce expenses but also foster a culture of trust, well-being, and productivity—giving your business a competitive edge.?

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Let’s tackle this together, and give your team the skills and confidence to have better conversations, work more collaboratively, and create momentum.

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At Think Be Do Leadership, we specialise in helping businesses proactively manage conflict and create high-performing teams who can talk to each other, deal with difficult conversations and collaborate as a team.?

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Whether through training programmes, workshops, or one-to-one coaching, we’ll work with your leaders to equip them with the tools they need to resolve conflict, improve morale, and drive productivity.?

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Ready to transform your workplace? Book a strategy session here:

[Book a Strategy Session with Julie)?

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Julie Hutchison

Leadership Coach, Think Be Do Leadership?

Email: [email protected] ?