Conflict in organizations is not a problem. Well managed conflict contributes to creativity, strategic initiative, more effective systems and communication, stronger workplace relationships and greater commitment to the organization. Organizations shouldn't attempt to prevent conflict, but should instead focus energy on preventing unresolved or destructive conflict.

Left unresolved or escalating destructively, conflict is expensive, both in financial and human terms. Some conflict costs are easily measured, such as legal fees and losses associated with theft and sabotage. Conflict that escalates so far as to damage an organization's reputation is measurable in terms of lower earnings or diminished market share.

The hidden costs of conflict can be more significant to the bottom line and the overall health of the organization. Here are a few of the most common conflict costs that are overlooked by managers:

Time and salary loss. Studies over the last decade suggest that between 30% and 40% of a manager's time is spent dealing with employee conflict and helping employees reach agreement. In a study I conducted in 2000, managers' time on conflict ranged more commonly from 40% to 50% of work hours. The total amount of time spent on a conflict and away from other work typically includes the time of the employees involved, the manager to whom those employees report, and in larger organizations, the human resources manager and legal counsel. It adds up quickly.

Attrition. Research reported in the late 1990s showed that workplace conflict left unresolved for too long leads to team members leaving the company or using valuable work time searching for alternative employment. Employee turnover due to conflict results in severance costs, recruitment costs, training and development costs, and loss of productivity during that period.

Absenteeism and health care expenditures. The Journal of Occupational and Environmental Medicine has reported that health care costs are nearly 50% greater for workers who report high levels of stress. Stress as a reason for absenteeism increased 316% between 1995 and 1999 and studies suggest that it is a common byproduct of unhealthy workplace conflict.

Grievances and related complaints. Between 1992 and 1998, annual monetary benefits for EEOC sexual harassment cases increased from $12.7 to $34.5 million. Annual monetary benefits for EEOC-handled ADA cases increased from $200,000 to $49.1 million during the same period. Neither of these figures includes monetary benefits obtained through litigation.

Copyright © 2004 by Tammy Lenski. All rights reserved.