Organizations often look at conflict in the workplace in terms of what it costs them in litigation or in relation to risk management.
In reality, there are all sorts of other hidden costs that add up to astronomical amounts when conflict in the workplace is not dealt with early enough.
In this article, we’ll be looking at what those costs are and what you can do to reduce them.
People Need to Feel Heard:
When I was about 16 years old, I had a job in a local grocery store. I worked in the deli, slicing ham and bologna for local customers.
While in this first “real” job of mine, I started to notice some unethical behaviours. They were all somewhat minor transgressions – people stealing small items, like a few candies out of the candy bin. Or taking something to eat over their lunch break and not paying for the item.
I remember sitting at the kitchen table and discussing this with my dad, a management consultant. I told him that I thought those behaviours might be linked to the way people were being treated within the organization.
The management style was difficult and controlling. People complained frequently and didn’t feel respected. I could sense in the way that those pilfering items talked that they felt entitled to take what they wanted.
Even as a 16-year-old, I could see the link between individuals not feeling respected and people not being respectful in the choices that they made in their roles.
My dad, on the other hand, argued that these people were simply inherently bad, unethical people. He saw no link between the decisions people were making and the organizational culture.
Little did I know that that insight, at age 16, would end up being related to my career decisions several decades later.
Now, I in no way believe that all poor decisions made by employees are the organization’s fault. The decisions that employees make at any one moment in time are related to a multitude of factors, some of which have absolutely nothing to do with the workplace environment.
However, we’d be fooling ourselves to think that organizational culture in no way impacts how an employee shows up in their role on a daily basis.
When employees don’t feel heard, there are huge costs to the organization that extend way beyond people stealing penny candies.
The Exorbitant Costs of Conflict
The costs of tension and conflict in the workplace also extend well beyond litigation costs. Litigation is the absolute end of the conflict continuum, when nothing else has worked to resolve conflict.
Through his 45 year long career Dan Dana, President of the Mediation Training Institute, who is also known as “the Conflict Doctor”, has concluded that more than 65% of performance problems are due to relational problems amongst employees.
According to research in the U.S. by Overton and Lowry, employees spend an average of 2.8 hours per week on conflict in the workplace.
Let’s extrapolate from this article for a moment. Consider a team 10 of individuals within an organization who make an average salary of $75,000 a year. That’s $56,000 per year in lost productivity due to conflict alone. Just for those 10 people. Scale these numbers up for larger organizations and the numbers are absolutely astronomical.
But the reality is that lost productivity and performance issues are only the tip of the iceberg.
Let’s Dig a Little Deeper
Let’s throw in the cost of absenteeism for the days when people decide to stay home, simply because they become so fed up dealing with the stress that conflict brings. Never mind the cost of presenteeism, where employees who are at work become disengaged and are simply going through the motions instead of fully applying themselves in their role.
According to a study by Queen’s University, “management transparency is the top factor when determining employee happiness”. Happier employees are more engaged in their work. The same study also found that organizations that have the highest levels of employee engagement experience 26% less turnover.
What are the annual costs of annual turnover in your organization? What would it look like if you could not only reduce these costs by 26%, but also save $56,000 per team of 10 employees by recovering those hours that are lost to conflict each week?
And let’s not even get into opportunity costs related to missed deadlines, projects moving more slowly due to poor communication, or not being able to grow your business as quickly as you might like.
Oh wait. And there are also the costs of mediation and litigation that could be avoided by managing conflict more effectively, from a much earlier on.
I think you get my point.
A Preventative Approach to Conflict Management:
The reason that interpersonal communication challenges evolve into conflict and lead to such high costs is simply because more minor issues haven’t been addressed effectively earlier on.
Conflict in the workplace is a spectrum – ranging from minor disagreements and annoyances all the way to complex litigation.
When not dealt with effectively early on, minor disagreements multiply exponentially over time.
So How Do We Cut the High Costs of Conflict?
The good news is that the fix is pretty simple.
When organizations decide to prioritize developing the interpersonal and communication skills of their managers and leaders, they become skilled in addressing and managing minor conflicts effectively before they escalate.
Doing so means that you’re building your business with a solid foundation.
This solid foundation ensures that that costly symptoms of conflict described above don’t come in create huge, costly cracks in your business.
The single most significant decision that organizations can make to save time, money and sanity related to conflict in the workplace is to make sure that everyone in a management or leadership role can recognize early signs of conflict and manage it effectively early on.
This means being able to address issues openly, directly and empathetically.
It means that they know, accept and acknowledge their leadership communication strengths and weaknesses.
It also means that they know how to adjust their leadership communication style based on the individual and the situation at hand.
When managers and leaders are able to communicate in ways that inspire people to listen, it naturally motivates individuals to follow their manager’s lead.
This is what happens when we communicate in ways that effectively address minor challenges, rather than letting them build up over time which ends up costing organizations a ton of money.
If you’re ready to take the steps needed to implement a more preventative model of conflict resolution to save your organization time, money and sanity so that your team can hit those performance goals faster, book a free discovery call now and let’s talk.
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