4 ways workplace conflict is tanking your business

The Brief
Tiffs and tension between coworkers are more than annoyances or water cooler fodder. From decreased productivity to high turnover and revenue loss, it’s impacting your business in a big, bad way. Editor’s note: This is the first of two pieces in our series on recognizing and mitigating workplace friction.

On average, conflict erupts in the workplace every 20 minutes, according to Deborah Mackin, president and founder of New Direction, a corporate consulting firm that’s advised Coca-Cola, Energizer and McDonald’s. Further, Mackin says, most companies aren’t at all equipped to handle any of those conflicts. “As a consequence, the parties involved never really get things ‘off their chests,’” she explains. “They hold on to resentments for years, letting it affect how they function in the organization.”

In other words, seemingly minor spats can have a wide impact, and in more ways than you likely realize. Ways like these:

While “emotional contagion” sounds like the culprit in a cheesy horror flick, the idea is an important one: we are all affected by the emotions of others. “Negative emotions experienced by team members in conflict can spread to others on the team,” says Craig Runde, director of the Mediation Training Institute at Eckerd College.

That negativity can undercut a company’s market competitiveness. An organization can successfully overcome challenges only if everyone is fully committed to the task. “But conflicts act as interference,” says Mackin. “Employees won’t give all they’ve got when there’s unresolved issues.”

Managers spend up to 40 percent of their time dealing with conflicts, says Runde, an alarmingly high number even if mediation is part of the job description. But when CPP Inc.—creators of the Myers-Briggs Assessment—studied workplace conflict across various countries, it found that all  U.S. employees, not just managers, wasted nearly three hours a week on office friction. What’s more, nearly 10 percent of them blamed it for a project’s failure.

And that’s assuming staff members make it into the office at all. According to the CPP study, one quarter of U.S. employees have taken sick days or missed work to avoid workplace tension. “Stress is the number one reason employees miss work—and unresolved conflict is the root cause of stress,” says Anne McSorley of WorkBest Consulting, a business consulting and executive coaching firm that’s worked with Lockheed Martin and Wells Fargo.

When the occasional sick day can’t alleviate the stress, employees will leave for good. And, the CPP study shows, we’re not talking an individual here or there: 18 percent of the study’s respondents had watched an embroiled coworker leave. McSorley points out, “bad news travels fast, creating fear and an atmosphere of distrust in the workplace.” As a result, companies lose talent, and often their best talent. “Star employees don’t put up with stress,” McSorley says. They get another job.”

All of this adds up to a dollars-and-cents cost to companies. Three hours a week may not sound like a lot, but that conflict-coopted time comes at a hefty price: according to CPP, $359 billion in the U.S. (based on average hourly earnings of $17.95). For the one in four employees out sick, tack on an additional $140 for every day missed. And don’t forget the expense of those fleeing altogether. Replacing an employee costs 150 to 200 percent more than that employee’s salary and benefits, so even mid-level employees can cost at least $80,000 to replace.

Of course, there are less obvious expenses, too. “One hidden cost is the health effects,” says Runde. “Stress creates physical and psychological problems, which can lead to higher healthcare costs for individuals and organizations.” By some estimates, the all-in cost of office friction to U.S. employers is $200 billion per year.  In fact, research has shown that each instance of conflict can cost organizations $50,000 to $500,000.

The Takeaway: The cost of workplace conflict extends far beyond the parties involved. The cost is to the company as a whole, and thus any issues of friction should be seen as a company-wide concern.

In the second part of this series, we’ll discuss how leadership can prevent and mitigate conflict.

Scott Simone is assistant editor at Westchester Magazine and associate editor of 914INC., a quarterly business lifestyle magazine. This is his first post for RelSci.RelSci is a technology solutions company that helps create competitive advantage through a crucial yet vastly underutilized asset: relationship capital with influential decision makers. 

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