White Paper: Cost Workplace Conflict


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Conflict is present in every workplace. In fact it is the single most preventable cause of lost revenue.

In this short paper we describes how employers of all sizes can mitigate the impact of conflict in the workplace, through specific proactive efforts designed to reduce the presence of conflict in the first place...positively impacting the bottom line.

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White Paper: Cost Workplace Conflict

  1. 1. Conflict In the Workplace The One Thing Costing Every Employer money Center for Resolution, LLC CFRMediation.com Copyright 2011 Center For Resolution, LLC CFRMediation.com Page 1 of 11
  2. 2. Workplace Conflict - What Is It? ACME Insurance - Arnold & EmilyConflict is present in every workplace. It is, in fact, the single mostpreventable cause of lost revenue for businesses of all sizes although Arnold, a longtime employee at ACME Insurance Co. was irritated by new colleague, Emily, after shethe scope of the issue is seldom fully recognized. gave a somewhat dismissive response to hisConflict is to be expected: It is not possible for two people to work instructions as to how to conduct a task. His response was immediate. He told her not to asktogether, no matter what their role or personal investment in an him any more questions and refused to speak ororganization, and always agree. The potential for disagreement and acknowledge her unless absolutely necessary, neverclashes only increases as a work team grows. getting to know or establish a productive working relationship with her. Eventually Arnold assignedConflict is not always a negative in a work team. Disagreements as to Emily a case that required specific procedures beprocess, service, design, or other work related issues allows business followed that she did not know. Emily followedto evolve. As a positive influence, it challenges employees to push Arnold’s limited instructions to handle the case, butthemselves to create and develop new innovations for the benefit of did not complete some needed administrativethe employer. Positive workplace conflict pushes teams to collaborate, steps. She badly mishandled the case, triggeringdevelop new ideas, and improve. outside auditors to repeatedly review the organization’s practices and adherence to legalIf team members consistently avoid bringing up new ideas or making standards. In addition, her handling of the casesuggestions for any reason ideas cannot evolve. The work product exposed the employer to liability and litigation aswill stay the same. Business will not evolve at the pace needed to well as jeopardizing a multi-million dollar contract.keep up with today’s marketplace. This form of workplace conflict is Although the entire team was aware of theproductive – it is focused on the “product” not the “person”. In this difficulties between Arnold and Emily, everyone –case the conflict is forward moving and change oriented. It increases including their manager – simply tolerated therevenues and fosters an exciting work environment. situation. The conflict was not addressed, as it did not seem that significant and both employees appeared to be meeting expectations. However,However while at times conflict can be a positive change agent in the this simple interpersonal conflict cost the organization tens of thousands of dollars bothworkplace, most often the conflict experienced in the workplace is not directly through the mishandling of the case and lostpositive. Instead it is a negative and costly occurrence for both revenue due to the impact of the conflict on Emily’semployees and employers; hindering engagement, productivity and productivity. The cost could easily have been muchcreativity for both employees and the workplace. This is a result of higher – and often it is.conflict is taken or experienced personally. Copyright 2011 Center For Resolution, LLC CFRMediation.com Page 2 of 11
  3. 3. Workplace conflict focused on a person or experience is costly and seldomproductive in the workplace. Although often not recognized as a significant issue,it easily escalates to become a significant problem for every employer andbusiness: one that must be addressed as efficiently and positively as possible.An Ignored IssueBusiness owners and managers have a lot on their plate. As a rule, they mightfind it difficult to focus on issues that are not obviously pressing. Deadlines mustbe met and responding to something that is not urgent can seem like a distraction.Some even view addressing interpersonal conflict as inappropriate. They viewthe spats and disagreements of their employees as not belonging in theworkplace in the first place: “I’m running a business here, not a daycare!”Yet ignoring the conflict, for whatever reason, is akin to not addressing a leakingoil pipeline. Revenues keep slipping away, while the conflict pollutes theorganizational culture. Animosity, distrust, hostility, and rivalries betweenemployees become standard. The full effects may not be clear at first, but canleave a lasting stain on the environment. And the leak, left unplugged, grows.Typically conflict must escalate to a point where it cannot be missed before it isrecognized or addressed. Oftentimes this means that the conflict has expandedto a point where productivity is clearly disrupted, and litigation may threatened.Many assume that no obvious work disruptions or threatened litigation mean noconflict. However, it is much more prevalent than the impossible-to-ignore casesand is present in every workplace.Whether recognized or defined, it negatively impacts every business andemployer, even when occurring under the radar of employers and management.Conflict in the workplace is typically subtle: a quiet occurrence betweenemployees. It may be a single eruption that appears to end as quickly as it began.There may not be a clear onset. Copyright 2011 Center For Resolution, LLC CFRMediation.com Page 3 of 11
  4. 4. There can be any number of conflict triggers, work related or not, but often it is the result of: • Personality conflicts • Simple misunderstandings between employees • Contrast between expectations and other variables • Problematic or poor communication skills • Other interpersonal interactionsRegardless of how it began, left unaddressed it can quickly grow to consume valuable employerresources and perhaps permanently destroy business relationships and reputations.It’s Just Business - What’s the Problem?Despite the business-nature of the relationships and interactions, issues that occur in theworkplace are typically experienced as a personal attack. Even when the conflict is about astrategy or business direction, it often is understood to be a questioning of personal skills orabilities. As a result, the reaction to the interpersonal conflict, even when it centers on abusiness-related interaction, is very much a personal one.In truth, the rationale behind the negative impact on the workplace is not that surprising:People do not like conflict. Even those who seem to be high-conflict or competitive, find adispute or conflict that they are personally involved in to be uncomfortable. Situations that causediscomfort cause pain. Pain is avoided. Left unresolved, the conflict bleeds into every thoughtand every interaction; other employees are affected and involved. The conflict grows, becomingmore uncomfortable and obvious. Employees and managers feel less able to satisfactorilyresolve the issue. Employee engagement is affected as individuals look for other solutions..It is not unreasonable to say that decreased productivity and engagement among the largerteam as a direct result of one employee’s discomfort in interacting with another. For the Copyright 2011 Center For Resolution, LLC CFRMediation.com Page 4 of 11
  5. 5. individuals directly involved in a conflict, small behavioral adjustments are typically made tocope with and prevent interaction with the source of their personal discomfort.  Employees alter schedules and behaviors to avoid impromptu run-ins  Employees stop speaking to one another except as is absolutely required  Employees brood about the conflict, distracting themselves at work  Absenteeism increases, as the employee opts to use all available PTO to avoid dealing with a co-worker  Employees may even sabotage one anotherThese behavior and communication adjustments may seem slight and may even lessen theappearance of conflict, actually making it less likely that employers and managers will takeaction. However, responding to conflict this way can actually feed the negative interactionsbetween the employees and significantly increase the negative impact of the conflict. Silenceor limited interaction tends to fuel bad feelings rather than alleviating them.In addition, ongoing conflict between workers can increase the likelihood that colleagues willmisread one another resulting in hurt feelings, ineffective communications, or even grosserrors. Employees who have difficult relationships with one another expect difficult interactionsversus positive productive ones with the involved employees. Expecting difficult interactionstends to increase the likelihood that they will occur.Employers and managers may not pay much attention to conflict at this point as workcontinues to get done and no formal complaints have been made. In fact, many managersbelieve that conflict in the workplace is not something to be bothered with if it is just makingsome “uncomfortable” – if it does not appear to be a significant problem. However, even atthese initial, often hidden, stages workplace conflict is negatively impacting productivity andrevenue: the conflict is costing employers money. Copyright 2011 Center For Resolution, LLC CFRMediation.com Page 5 of 11
  6. 6. In the earlier case example, Emily expected that Arnold would not answer her questions as how to properly handle the case that he had given her. She insists that she told him that she did not know what procedures were expected; while Arnold insists that he thought she had handled it fine and was not aware of her questions. It later became clear that Emily had started to expect a certain level of response to her questions from Arnold, as a result of his behavior towards her, and may not have clearly stated to him that she did not have the knowledge to handle the case on her own. Both employees’ response to the conflict between them perpetuated it and contributed to the costly error.Computer Sales Company - Pete & PeggyPete and Peggy work together at a computer sales company as support personnel. Over their first few months as colleagues, theyappeared to develop a strong working relationship. They shared breaks and lunch with one another, and were often seen laughing andjoking together. Although their friendship was close, it was clearly platonic and centered around their work life.No one was more surprised than Pete when Peggy complained to her supervisor that she felt harassed and bullied by Pete. In thiscase the supervisor initially met with both employees separately and suggested that Pete avoid as much interaction with Peggy aspossible. This did ensure that there was no apparent conflict, however both Pete and Peggy experienced varying degrees ofdistraction and distress at work – and increased stress in general – as a result of the unresolved issues surrounding their relationship.The situation was further complicated once organizational policies dictated that, because she reported feeling harassed and bullied,the complaint be reopened and an official investigation conducted regarding Peggy allegations. The investigation involved the ongoingparticipation of four employees (HR staff and managers) in addition to Pete and Peggy. The investigation moved relatively quickly andparticipants were limited as Pete and Peggy worked on the same team. Despite this, the six employees spent a significant number ofwork hours on the investigation. No actionable fault was substantiated.With the participation and agreement of both Pete and Peggy, a resolution was documented detailing how both parties would continueto function in their roles with the organization and interact with one another.Despite the positive outcome, all employees and managers involved in the investigation diverted a significant amount of work hours inthe investigation and experienced work related stress and distraction as a result of the conflict, investigation, and ongoing interaction.In effect, this simple personality conflict between two employees cost the employer thousands of dollars. Copyright 2011 Center For Resolution, LLC CFRMediation.com Page 6 of 11
  7. 7. The Revenue DrainConflict in the workplace costs US employers well over a billion dollars every year. In fact, it isthe single most preventable cause of lost revenue in business.The actual cost of conflict is seldom fully recognized. Many wrongly assume the costs comefrom the high fees and settlements generated through harassment and wrongful terminationlawsuits. Although some certainly come through litigation, the vast majority of lost revenue goesunnoticed. The costs are the direct result of lowered employee engagement and productivity,increased absenteeism and employee turnover, diverted resources, and increased stress-relatedhealth costs. Ongoing conflict significantly reduces an employee’s commitment to anorganization and reportedly is a contributing factor in the vast majority of employee separations.Those employees who have a significant level of conflict in their work relationships find that theproblems working together increase as long as the conflict is left unaddressed. Meanwhile theconflict bleeds over to other employees. Even in cases where managers are not aware ofproblems between employees, their co-workers are and often take sides. Additionally, theyinadvertently enable ongoing conflict while trying to work around the existing problem. The endresult? Distrust and suspicion grows among the team as a whole: every action and behaviorseeming suspicious and purposeful.Some Facts About Workplace Conflict: • Although the numbers vary, a typical manager spends anywhere between 20 to 40 percent of their time responding to employee conflict – that is 8 to 16 hours a week. • Workplace conflict is a decisive factor in more than half of employee departures and over 90% of cause-related terminations. • Employee turnover results in costs related to recruiting training, lower productivity of new hire, and secondary morale effects on managers, peers and subordinates. • Unresolved, workplace conflict can end up in litigation, easily costing a company $50,000 to $100,000 in attorney fees and 3 to 5 years to settle. • Customers avoid working with employees or organizations with high levels of conflict. • Conflict significantly increases personal stress levels. Personal stress decreases employee engagement and costs employers over $1.5 billion annually. Copyright 2011 Center For Resolution, LLC CFRMediation.com Page 7 of 11
  8. 8. Creating Culture Of Proactive Conflict Resolution Creating a Culture of Proactive Conflict Resolution defines problematic workplace conflict more broadly and encourages all employees to respond to conflict as it occurs. Everyone actively engages in practices that prevent workplace conflict in the first place and reinforce positive communication. Consequently, the negative effects and costs associated with conflict in the workplace are eradicated and employee engagement within the organization is enhanced. It is not enough for policies and procedures to be created that address workplace conflict. It is a start, but to be successful, all employees must be given the tools and skills to communicate more effectively as well as to recognize and respond to conflict in a proactive assertive manner. Employers, managers, workplaces, and team members as a whole must integrate this culture into their method of doing business inside and outside organizational walls.There are always going to personality conflicts between coworkers. Likewise, there will always be disagreements aboutexpectations and processes. Creating an organizational culture of proactive conflict resolution means: 1. The workplace promotes and encourages conflict to be addressed constructively and immediately. 2. All employees are given the tools to better communicate with one another including those with whom they have a conflict. 3. Employees experiencing ongoing conflict with coworkers have a clear means to address the issues in a safe, neutral and confidential environment before it escalates. 4. Managers address recurrent conflict situations with specific employees, looking for a constructive resolution for the employee, team, and employer organization. 5. Conflicts between employees are first mediated, if at all possible, versus “judged” through investigation. 6. The organization seeks an optimal resolution to disputes where those in conflict work together to create a workable solution to their issues. Copyright 2011 Center For Resolution, LLC CFRMediation.com Page 8 of 11
  9. 9. In a culture of proactive conflict resolution employees bothered by the words or behaviors of another are better equipped tocommunicate their discomfort to the other employee before a significant incident occurs. Employees who are experiencing anongoing conflict have a clear path to seek support from managers and HR before having to identify a situation as “harassment”,“bullying”, or “hostile work environment”. Employees who need extra coaching or communication skills building are identified andprovided the needed supportive services to better enable them to positively contribute to the workplace - as soon as the need isrecognized.In an organization with a culture of proactive conflict resolution, our two examples of conflict in the workplace would have hadvery different outcomes: In Emily and Arnold’s case, both employees (and the team as a whole) would have been aware of and encouraged to access available assistance to address their difficulty in working with one another effectively. Their manager at the insurance company would have been tipped off to the difficulty allowing a facilitated communication between the two. If needed, Emily and Arnold would have worked with a neutral third person to talk out and resolve their conflict before it became a liability and to create a plan to avoid triggering these issues in the future. Expectations for one another would be clearly delineated. The employer’s expectations of both employees would be clarified, while both Emily and Arnold would be supported as valuable members of the organization. In Pete and Peggy’s case, Peggy would have been aware of options to communicate her discomfort to Pete before reaching the point of distress that occurred. The employer would have provided her with tools to better communicate her expectations and general comfort level to her colleague. In addition, if for some reason, she was not comfortable doing this alone, she would have been able to seek the confidential services of an third party to facilitate the conversation. In the example given, Peggy and Pete did initially work out a solution to their interpersonal conflict with the assistance of their manager. The best case scenario would be one where both employees participated together to discuss and mediate a resolution to their conflict, which was not yet part of the managerial policy, but a solution was reached nonetheless. More important however, is that Peggy felt that she no option to address the problems she was experiencing in her relationship with Pete until she defined as harassment. In fact, as is the case with the majority of employers, there was no stated assistance for Peggy prior to that point. What company policy did dictate (as is appropriate) was that an immediate and aggressive investigation of all harassment complaints occur. Once the term “harassment” was included in Peggy’s discussion with her manager, simple conflict resolution focused intervention was no longer an option. Therefore the initially resolved complaint had to be reopened and go through the official and costly process. Copyright 2011 Center For Resolution, LLC CFRMediation.com Page 9 of 11
  10. 10. Role Team Building Programs In Reducing ConflictAs a part of creating the infrastructure to foster a culture of proactive conflict resolution, a schedule of training to promote theongoing development of conflict resolution and positive communication skills is needed. An effective training medium are teambuilding programs that clearly focus on directly building conflict resolution and communication skills. Such a program allowsorganizations and teams to improve communication and conflict resolution skills while in a fun non-competitive environment -increasing their ability to work together productively. As an added benefit, employees have an opportunity to get to know oneanother in a different environment, build relationships, and develop their communication and problem solving skills with a trainedfacilitator. An effective team building program significantly reduces the negative effects of conflict in the workplace, at a fraction ofthe cost of a single workplace incident.Not all team building programs are the same - there are a variety of programs that are available, with varying degrees ofeffectiveness. It is important to make an informed choice to ensure that the desired goals are accomplished. In general, the teambuilding activities can be classified into the following categories:  Activity-Based Team Events – These are a common type of event sponsored by employers. The activities vary from golf outings, scavenger hunts, entertainment based outings, volunteering, physical challenges such as wall climbing, and competitive games including dodge ball and laser tag. Although these events are generally fun for some – they are not positive events for others. With doubt, many employees dread team building events and participate, or make an appearance, only as required. In addition, many of the most common events have an inherent element of competition. Although such team building events are widely accepted as the norm, there is scant evidence to support their effectiveness. Effective team building requires more than morale boosters. Most importantly, such an activity-based event itself can trigger latent conflict within team members: conflict that is brought back to the workplace and can actually impede teamwork defeating the purpose of the event. Copyright 2011 Center For Resolution, LLC CFRMediation.com Page 10 of 11
  11. 11.  Insight Oriented – There are many team building programs that use psychological tools to assist workers in better understanding their, and sometimes their teammates, personalities, communication styles, and approach to conflict. The available tools are many, but some common ones are: MBTI® Myers-Briggs Type Indicator, FIRO®, TKI, and the DiSC®. Using any one, or a combination, of these tools can be a helpful part of a team building program, as they can be very helpful in terms of gaining a better understanding of how a person works. However, the information gleaned through these tools is really little more than insight into a specific individual, and does not provide clear tools for implementing the insight. Insight alone has a limited benefit and often does not translate into improved interpersonal or professional interactions. In addition, caution should be taken to ensure that the individual employee’s privacy is respected. Discussing the specific results openly in a group setting can result in an employee being uncomfortable with the personal exposure. Especially in a workplace already dealing with problematic conflict, such vulnerability is likely to increase issues versus resolving them.  Practical Tools – Team building programs that focus primarily on teaching practical methods to respond to conflict situations as well as to facilitate positive communication in any interaction have the most immediate impact on individuals. Such practice tools programs combine the teaching of specific skills and techniques with experiential exercises allowing for direct practice in a safe simulated environment. A skilled facilitator is particularly important to lead these programs to ensure effectiveness and to mitigate employees discomfort with the exercises. These programs are best conducted on-site by a neutral outside facilitator, as the participants typically find the experiential exercises difficult to do under the eye of a fellow staff member much less a supervisor. In addition, related non-competitive ice-breakers and group activities should be integrated into the program._____________________________ABOUT CFRCenter For Resolution, LLC is committed to Peaceful • Positive • Resolution: encouraging the active resolution of interpersonal conflicts as well as thefostering of a culture of proactive conflict resolution in organizations. Our services, available throughout the US, encompass conflict resolution designedto prevent the presence of conflict – through training and education – along with the resolution of active interpersonal conflicts through mediation. All workplace training and team building programs are designed by Erin Johnston, MSW, LCSW. All exercises are structured to enable employees to develop their skills in a safe and non-competitive environment. Our programs are designed so that every employee can leave with tools they can use immediately to improve productivity as well as relationships as a whole. Copyright 2011 Center For Resolution, LLC CFRMediation.com Page 11 of 11