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What’s the True Cost of Conflict?

Workplace conflict may be frustrating, but is it worth the incredible effort required to tackle it? Take a close look at the financial and human costs of not being able to reduce conflict — a problem known a “conflict incompetence” — for the answer.

As noted in Becoming a Conflict Competent Leader, when conflict is mismanaged, costs mount. Some out-of-pocket costs like absenteeism and lawsuits are relatively easy to observe and calculate, but other costs, like poor decision-making, lost opportunities, broken trust, and diminished quality of working relationships, can prove more costly, but they are more difficult to quantify.

To identify the real cost of conflict in your organization, consider the following 7 factors:

1. Wasted time. How much management time is wasted on conflict rather than addressing more productive issues? Remember to factor in lost productivity when employees spend time complaining to coworkers about the conflict.

2: Employee turnover. When conflict is severe or ongoing, especially when there’s a sense of betrayal in the workplace, employees are likely to seek a better place to work, particularly when the job market is strong. Don’t underestimate replacement costs. The cost of finding, training, and bringing a new person up to speed (particularly if they were a high-potential) can often exceed the annual salary of the employee who leaves. It certainly costs more than addressing conflicts in the first place so employees do not get frustrated and leave.

3. Grievances, complaints, and lawsuits. If problems are handled effectively from the start, many issues can be resolved informally at much lower cost. If problems are ignored or not handled well, then the conflict spirals out of control and requires third-party intervention, requiring more time, effort, and cost.

4. Absenteeism and health costs. Employees often stay away from work to avoid dealing with conflict or to delay a confrontation. Others may take time off to address the physical and emotional stress of conflict. Health care costs, in connection to stress-related illnesses, are part of the price of conflict incompetence.

5. Workplace violence. Conflict can escalate out of control. The National Institute of Occupational Safety and Health estimates that more than one million workers are assaulted each year at work, and a significant number of these assaults come from disgruntled customers, patients, coworkers, and employees. The emotional toll can be enormous, and can increase the costs associated with retention, absenteeism, and health care.

6. Poor decision-making. Destructive conflict disrupts the organization’s ability to function effectively. People begin to lose their energy and creativity. They pull back, stop sharing information, and take fewer risks. The result can be less collaboration across boundaries and poorer quality decision-making.

7. A poisoned workplace. Conflict causes all sorts of unpleasant emotions and reduces the sense that you’re in a psychologically safe work environment. Anger, fear, defensiveness, negativity, hurt and embarrassment, combined with misunderstanding and distrust, will lower morale and strain relationships.

By increasing your conflict competence, you can make yourself and your organization more productive. Learn our tips for calming conflict in the workplace.

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Upskill your team so that they’re more competent at reducing the cost of conflict with custom leadership training tailored to to your organization’s challenges. Available topics include Conflict, Emotional Intelligence, Psychological Safety, and more.

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