The Costs of Conflict and The Savings of Change Management
By Michael Althshuler, JD, MS
The ability to consciously manage conflict is essential to maximize efficiency, employee morale, and most certainly the year-end bottom line.
The statistics of the cost of conflict at the workplace are impressive. In the United States it has been estimated that 25-60% of a manager’s time is spent on resolving workplace conflict (CCR). This is an extraordinary demand for any manager to meet. In 2005, a study in the United Kingdom by Roffey Park found that 78% of managers are suffering from work related stress. It is likely that the burden of managing workplace conflict is a substantial factor in creating this stress.
A survey done at the University of North Carolina reflected that 53% of workers said that they lost time worrying about a past or future conflict with a co-worker, 37% reported that conflict with other employees decreased their commitment to their employer, and 22% said a hostile altercation caused them to reduce their commitment to their organization (Rachel Zupek, CNN.com, 31/12/07).
Can you recall a time when one of your co-workers was preoccupied by a workplace conflict? What effect might the conflict have had on the surrounding co-workers, and how did the behavior of those involved effect affect workplace morale?
The following behaviors are often associated with poorly managed workplace conflict:
- Bickering, infighting, undermining, hoarding information
- Not completing tasks, not responding to emails, sabotage
- Less effective client/provider management, accidents, hostility
- Passive-aggressive behavior, blaming, complaining
A workplace conflict affects not only the parties or departments involved, it reverberates throughout the entire environment in much the same manner as a small rock dropped in a mountain lake; while co-workers may try to look way, they cannot remain unaffected. The defensive and aggressive behavior generally used by people in conflict, whether it is conscious or unconscious, is contagious. We all know what this behavior can look like. It invariably leads to in-efficiency and decreased productivity, and will result in a difficult and stressful working environment.
The Journal of Occupational and Environmental Medicine, in the United States, has reported that health care costs are nearly 50% greater for workers who report high levels of stress.
Absenteeism has long been an acknowledged cost of a stressful or poor workplace environment. We can now talk about another, perhaps costlier concept, that of Presenteeism.
Presenteeism occurs when employees “retire on the job,”(Duxbury & Higgins, Work-Life Conflict in Canada in the New Millenium, a status Report, 2003). This occurs when employees plan to leave their job and experience lower commitment, are more dissatisfied, decrease their productivity and reduce morale in the area in which they work, causing workload problems for others. How costly can this be over a period of 6 or 8 months? The rate of ‘presenteeism is estimated to be as much as three times higher that that of absenteeism (WarrenShepel [online], Health & Wellness Research Database, 2005).
And then there is the cost of employee loss and turnover. Chronic unresolved conflict has been a decisive factor in at least 50% of employee departures, with the exception of staff reductions due to downsizing and restructuring. (Dana, Dan, [online], the Dana Measure of Financial Cost of Organization Confllict, 2001). When the cost of employee turnover can be 75% - 150% of the employee’s base salary (Taylor, Robin, Workplace Tiffs Boosting Demand for Mediators, National Post Mar. 17/03) this cost has a substantial impact on the bottom line.
At the same time, while focusing on how to manage or prevent conflict, conflict is often perceived as a boogeyman, a dangerous element in the workplace, an indication that our management skills have been inadequate. It is sometimes difficult to remember that conflict is not the problem, the problem is poorly managed Conflict.
We can manage workplace conflict to eliminate many of the obstacles it poses to workplace efficiency. The objective is not to eliminate conflict, only to minimize the destructive effects of poorly managed conflict, (or to eliminate the behavior we use when conflict is not well managed.)
One important benefit of conflict is that it enables us to see that there is a problem. Conflict only occurs when there is a misunderstanding, or where there are conflicting needs or interests. As Einstein said, you cannot solve a problem until you can see it. As distracting and disruptive as the behavior associated with conflict may appear to be when going on between co-workers or departments, it is a clear signal that there is a problem to be solved.
Conflict generates considerable adrenalin for the parties involved. If effective skills and systems are in place, this energy can generate creative solutions to the problems. These solutions will replace the less effective processes that
generated the initial conflict. The divisive and unproductive behavior that accompanies unresolved conflict will no longer impede workplace productivity.
Progress....innovation...increased operational efficiency...important goals for every organizaton.
Implementing effective skills and systems to manage interpersonal and departmental conflict often requires a shift in perspective if not a significant organizational cultural change. Yet in terms of money to be saved and impact upon the organizational culture, this might be one of the best investments an organization could make.
A well managed conflict resolution process will include all the stakeholders, probably also team-members, who have an interest in the issue at hand. The team will likely experience a sense of increased group cohesion and empowerment as they successfully, respectfully, and collaboratively solve the identified issue.
This secondary benefit, a positive employee morale, is a powerful dynamic. The management skills and processes employed to effectively manage conflict not only clears the workplace of the debris and obstacles generated by ineffectively managed conflict, but also fosters communication and understanding between organizational team members. This can result in an organizational camaraderie similar to those consistently found in the companies listed as the best places to work.
Two of the first organizations to implement many of these new processes were emerging giants of technology. Microsoft and PeopleSoft, the latter now a part of Oracle, well exemplify organizations implementing innovative processes to maximize their human resource potential. Throughout their critical growth periods, MircroSoft and PeopleSoft created increasingly expanding markets, successfully competed with and rapidly outsized their competitors, to achieve formidable success.
Consider combining hundreds of employees, many extraordinarily talented, all in departments competing not only with international competitors, but vying for position with other departments in their companies as their organizations grew to meet a rapidly developing market demand, while at the same time often placing the demands of their personal lives second to those of a stressed and demanding workplace.
Despite the human resource challenge posed by these circumstances, these two companies not only achieved phenomenal success, they became two of the most desirable places to work in the United States.
There were two particularly significant human resource tools these companies used to foster and support this powerful dynamic. They offered their employees recognition for their work that was commensurate with the employees’ contribution to the organization’s success. Additionally, they molded and maintained a dynamic and committed workforce.
Aware of the distractions and costs of poorly managed conflict, they provided management with the skills to identify and address workplace conflict. In those instances where the manager was not best suited to manage an identified conflict, or for conflicts involving managers and/or their departments, conflict management processes were adopted.
To simplify the nature of these processes, they were built upon collaborative models that emphasize participation by, and respect for, all disputants. These processes were oriented towards facilitating a collaborative decision making processes between the disputants.
Think of a powerful waterway. Uncontrolled, and given the course of natural events, this waterway can wreck havoc upon the cities and landscapes it passes. Implement effective water control policies, and not only are the cities and landscapes left to prosper, but the waterway can generate electrical power to light the lights and contribute to unexpected prosperity.
Effective conflict management will not only positively impact the bottom line, it may become one of your most attractive and effective employee benefits.