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Costs of Workplace Conflict

What is Conflict Costing Your Organization?

"When an employee slammed a computer board down on his desk during an argument with his supervisor, it cost the company $1,700.00", relates Dr. Dan Dana of the Mediation Training Institute International. 1 While property damage is easy to see and quantify, other costs of workplace conflict can be more elusive. One study found that "42% of a manager's time is spent on reaching agreement with others when conflicts occur". 2 According to Working Dynamics, some "65% of performance problems result from strained relationships between employees -- not from deficits in individual employees' skill or motivation." 3 Consider the following factors when thinking about the cost of conflict to your organization. 4

Lowered Productivity. How many hours per week does each individual involved in a dispute spend participating in the conflict? (This includes time spent distracted, worrying about the conflict, or talking about it with other staff.)

Cost of structural changes. What job, reporting line, office, or other structural changes have been made in an attempt to manage the conflict?

Absenteeism. How many work days are missed because of conflict-related stress and illness?

Increased health insurance premiums. What percentage of premium increases is due to conflict and stress-related illnesses and accidents?

Conflict-incited theft, sabotage or equipment damage. What is the cost of damage or theft employees justify because of unresolved disputes with the organization?

Cost of replacing employees who quit or are fired because of a dispute. Finding, hiring, and training an employee is estimated to cost 75-150% of that employee's annual salary.

Litigation. Once a dispute reaches this point, it can cost millions.

Even using conservative numbers to estimate costs, the final figure for a single conflict can be staggering. Now multiply that times the number of conflicts your organization experiences annually.

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Excerpted from Susan Hackney of The Mediation and Training Collaborative, Greenfield, MA.


1 - Dan Dana at http://www.workplaceissues.com/resolve.htm (2/6/2006)

2 - Watson, C. and Hoffman, R. (1996) "Managers as Negotiators", Leadership Quarterly 7 (1) 1996, http://www.mediate.com/articles/Ford1.cfm (2/6/2006)

3 - http://www.workdyn.com/tools-ConflictStats.html (2/6/2006)

4 - See Dan Dana, The Dana Measure of Financial Cost of Conflict: Discovering the Hidden Cost of Preventable Conflict in Your Organization at www.mediationworks.com (8/18/2005)