The Price Tag of Conflict in the Workplace

Posted by Joyce Barnes on Oct 29, 2015 in Blog | 

Most CEOs would love office dramas to be just another story plot on their favorite TV soap opera in which they could just press the OFF button on the remote and the problem magically disappears. Just think how entertaining it would be to have David Copperfield perform such acts!  Unfortunately, it is not that easy considering the fact that workplace conflict can stem from the most trivial of offenses.  “It often starts out really small,” says Anne McSorley, partner with WorkBest Consulting LLC and a trained psychotherapist.  “But in a small business it can become viral.”  In a larger company, the conflict may be contained to a workgroup.  But in a small business, it’s everyone’s problem.  The problem with most management teams is the fact they are not seeing what’s happening until they get the letter and then the response is simply, “How can we make this not go to court?”

The CPP study found that the primary causes of workplace conflict are related to personality clashes, followed by stress and workload.  “We know that people who are similar get along better, but that leads to other problems, like groupthink,” says Rich Thompson, director of research for CPP.  While every small business owner knows that such workplace conflicts affect productivity and morale, the actual tangible money drain of office drama is not as obvious.  When CPP Incorporated publishers of the Myers-Briggs Assessment and the Thomas-Kilmann Conflict Mode Instrument commissioned a study on workplace conflict, they found that in 2008, U.S. employees spent 2.8 hours per week dealing with conflict.  This amounts to approximately $359 billion in paid hours (based on average hourly earnings of $17.95), or the equivalent of 385 million working days.  For example, 25 percent of employees said that avoiding conflict led to sickness or absence from work.  Equally alarming, nearly 10 percent reported that workplace conflict led to project failure and more than one-third said that conflict resulted in someone leaving the company, either through firing or quitting.  Those types of statistics equivocate into real financial losses especially for small businesses.  They also prove that leaders aren’t stepping in or staying out of it when they should.  While some level of conflict is healthy in the workplace, leadership needs to intervene if it becomes serious or has gone on too long.   So as a manager, you may ask what is too long? Here are some warning signs which indicate you need to intervene NOW: (And the typical manager spends 25-40 percent of her time dealing with workplace conflicts. Just think about how much productivity is being wasted!)

• A sudden change in employee behavior
• A sudden change in employee body language or verbal tone
• Increased absences
• A noticeable reduction in productivity
• Increased palpable stress levels

The leadership in your organization should always consider the cost of employee turnover.   For example, consider the costs of filling a vacant position, recruitment costs (placing ads, hiring headhunters), training the new hire, paying other employees involved in the hiring and training process, paying severance, and the lost investment you made in the previous employee (including their knowledge).  Smart leaders know that replacing an employee will cost you 150 to 200 percent more than that employee’s salary and benefits.  This simply means even a mid-level employee making $30,000 a year could cost your company $70,000 or more to replace.  Even more reason to put your reading glasses on and focus on ways on how to resolve workplace conflict immediately.  Not to mention the fact how it eventually affects your business image and customers.  However, finding ways to remove the employee or employees causing the high employee turnover due to conflicts would be definitely worth the expense.  I have seen management overlook the fact that maybe one or two persons are actually the ones causing multiple employees to leave.  The employees who resigned due to office drama are usually your most valuable because nine times out of ten they were seen as a threat by an insecure co-worker or manager.  Remember employees or managers that run people away from your business are not really for the business as a whole!

Ultimately, finding ways to deal with conflict comes down to the leadership of an organization, says Ralph Kilmann, an expert in the field of conflict management and one of the authors of the Thomas-Kilmann Conflict Mode Instrument.  “Change is possible if senior leadership is absolutely committed to changing the culture,” says Kilmann.  “But, you have to have real conversations about desired cultural norms and how to take advantage of people’s differences.”

References:

http://www.forbes.com/sites/85broads/2014/05/15/conflict-resolution-when-should-leaders-step-in/

http://www.entrepreneur.com/article/207196

Image courtesy of franky242 at FreeDigitalPhotos.net