How Much Does Conflict Cost Your Organisation?

How Much Does Conflict Cost?

Employees spend 2.8 hours per week dealing with conflict, according to a study commissioned by CPP (publishers of the Myers-Briggs Assessment and the Thomas-Kilmann Conflict Mode Instrument).

Here’s what this effectively costs your organisation (assuming a $50/hr total unit cost):

• 5 staff: $36,400
• 10 staff: $72,800
• 30 staff: $364,000
• 100 staff: $728,000
• 500 staff: $3.64 million dollars - yikes!

Clearly, organisations who can develop good conflict resolution skills within their staff, and particularly their managers, supervisors and team leaders, will be far more productive and efficient.

This could give them the competitive edge which will widen each month/quarter/year they hold the advantage.

Conflict in the Workplace

Managers often think that productivity is most closely tied to either employee skills or staff engagement. However Queensland Government research suggests that over 65% of performance problems are the result of strained relationships rather than a lack of skill or motivation. Thus, the way your organisation responds to conflict can have a huge impact on productivity as well as factors such as employee engagement and retention, innovation and collaboration.

The most damaging type of conflict is ‘unresolved conflict’. This can grow like mould - if not dealt with early, the problem gets bigger (and messier) as time goes on.

The most damaging type of conflict is ‘unresolved conflict’. This can grow like mould

Unresolved Conflict

The source of unresolved conflict might be a disagreement or debate, an argument, a clash of values, a pattern of behaviour that is left unaddressed, or even an off-handed or well-meaning comment that caused offence or hurt. When conflict escalates or festers and is allowed to continue, it becomes a toxic and costly part of a workplace. Unresolved conflict drags staff down day by day - and with them, the organisation’s potential to perform and execute it’s goals.

Is Conflict Always a Bad Thing?

Many types of conflict can lead to positive outcomes. Where conflict is actually the meeting of ideas, then it can be incredibly helpful and even vital for innovation and organisational improvement. Debate can be motivating and essential for moving forward, as long as it is respectful and professionally managed. When debate becomes hostile, or when the focus shifts from tangible practices to general dislike, then it needs to be dealt with as soon as possible.

When debate becomes hostile, or when the focus shifts from tangible practices to general dislike, then it needs to be dealt with as soon as possible.

So why and how should managers deal with unresolved conflict?

Managers Need Conflict Management Skills

According to the Queensland Government study, good leaders should be adept in all of these areas:

1. Managing difficult behaviours
2. Negotiation
3. Preventing and responding to bullying
4. Conducting informal and formal mediation
5. Managing groups

Leaders who lack conflict management skills and avoid conflict often end up being less effective at achieving their defined business objectives, and have more trouble managing people and being fulfilled in their job. Unresolved conflict can also negatively impact the leader-employee relationship to the extent that trust is lost, and an employee disrupts the workplace or leaves an organisation on bad terms.

How Managers Should Deal With Conflict

First, managers need to understand what contributes to conflict. There are a range of personal attributes, structural issues, communication styles and boundaries, and cultural preferences that may contribute to conflict in the workplace.

Furthermore, managers need to be able to stay calm in the face of conflict. This sounds easy on the face of it and it's quite amazing how many people say this isn't an issue 'for them'. Yet countless times external mediators are called in because a manager, supervisor, team leader (or CEO), lost control of their emotions. So clearly some (or most) of the people whom this isn't an issue for might be underestimating their own triggers and ability to have their buttons pushed - particularly when they're having the worst days, tired, stressed, sick, under pressure or whatever else. When conflict gets the best of people, what can happen is things escalate faster and more severely than they should.

Managers also need to be able to choose the right time and setting for a helpful conversation about the conflict. Whether it is for them to discuss with the parties to the conflict and get some more information or to bring the two parties together for an informal mediation-type of conversation.

Finally, Managers need to recognise and hold on to appropriate boundaries. There is a clear point where their continued involvement in a discussion/issue/conflict isn’t helping and managers need to be able to draw a line and stop a conversation from continuing. This can be particularly hard when emotions are raised, but it is essential to stop things getting out of hand. The consequences for a conversation that goes on too long can be quite serious (industrial relations issues, worker’s comp, staff turnover etc.).

Structural Issues

It is also important for organisations to examine potential structural and logistical causes of conflict. For example, many organisations we work with have complex or ill-defined lines of communication as well as unclear or non-existent delineations of responsibility and authority. Thus, it shouldn’t be surprising that conflict can easily arise where roles and responsibilities aren’t clear (or clearly overlap).

it shouldn’t be surprising that conflict can easily arise where roles and responsibilities aren’t clear (or clearly overlap).

A Good Dispute Resolution Process

When conflict arises, it is important to have a good dispute resolution process in place. This process should be able to provide a resolution through a process that is fair, transparent and consistently implemented.

Best practice dispute resolution processes should be:

• quick
• fair
• handled sensitively
• transparent

More in-depth information on this topic is available here: Guide to effective dispute resolution

I’m Simon Goode, mediator and trainer with Reboot: Grow. If you would like to know more about our Workplace Mediation services or discuss our Managing conflict Professional Training, please give me a call on 1300 163 020 or email [email protected]