Mitigating the costs of workplace

To stay profitable, a business needs to manage risk. So, to avoid a fire, for example, fire extinguishers and fire blankets are purchased, fire wardens are trained, regular fire drills are held, and new staff are inducted in procedures in the event of fires. Of course, fire insurance is a must.

But when it comes to workplace conflict, most businesses don’t even have a policy in place, let alone a strategy to deal with it. This is surprising because workplace conflict is, after all, far more common than fires.

As conflict is part and parcel of people working together, businesses should start to put some steps in place to mitigate the risk. Although conflict can lead to great innovation and spark creative solutions to hitherto intractable problems, more commonly it can leave as much destruction in its wake as, well, a fire.

The obvious costs to a business of workplace conflict are absenteeism, healthcare costs associated with stress, increased turnover and recruiting costs, termination packages and, possibly, legal costs.

But there are also other costs that may not be so apparent, such as sabotage or theft, wasted time, poor morale, decreased customer service and reduced productivity.

The Know Bull Workplace Bullying Survey[1] has discovered that the time lost to strife between workers is estimated to cost Australian workplaces, on average, between $6 billion and $36 billion every year in downtime. Compared to this, the cost of injury, lost lives and lost property to fire amounts to $1.7 billion[2]. Yet we still spend more on preventing fire than we do on preventing or managing workplace conflict.

How can workplace conflict cost so much? Let’s take Sarah and Bethany, both very different personalities but both intelligent, hardworking, ambitious and on $50 per hour. They used to be friends but things have cooled recently and then there was an incident at lunchtime (the spark).

An hour later and Bethany realises she has spent most of it staring out the window. She gets into a lift and runs into Angus. She relates what happened and Angus readily confirms that Sarah has behaved very badly.

Meanwhile, Sarah has been sitting at her desk going over and over what Bethany said. Jen notices her looking distracted and asks what’s wrong. They get a coffee, Sarah confides in her and Jen agrees that Bethany has gone too far this time (fanning the flames).

Over the next week, more people get drawn into the conflict as staff take sides or discuss what happened. Lost productivity runs at about $400 a day or about $2000 by the end of week 1.

Chris, the 2IC, finds out about the incident. He calls Bethany and Sarah into his office and reminds them of the organisational values about supporting colleagues. He asks them to shake hands. They do. He says this is the end of it.

It is not the end of it. Bethany and Sarah are angry that Chris didn’t even want to hear what happened. They feel as though he has treated them like naughty children and they are now resentful and truculent. They make sure everyone hears how badly Chris has handled this. The gossip mill cranks up another notch and flames are really getting some heat now.

It’s only week 2 and already this conflict has cost the organisation about $4000 in lost productivity. And the original conflict is no closer to being resolved.

Then Jeff, the manager, becomes involved and he speaks with Bethany. And Sarah. And Chris. And Nadia from HR. More time, more money. Jeff has so much on his plate that he really doesn’t have time for this. Bethany and Sarah are valuable employees and he doesn’t want to lose either of them. But this can’t continue so maybe he’ll have to let one of them go. Which one? Why can’t people just get along?

By now Bethany has taken stress leave and Sarah is talking about being bullied. Should they get in an investigator? What if Sarah takes this to Fair Work? Her claims are groundless (aren’t they?) but it will still involve more time and money defending it. The fire is out of control.

What would have happened in a workplace that manages conflict as well as it manages fire?

  1. Sarah and Bethany have their ‘incident’.
  2. Both review the conflict resolution policy (Step 1: try to resolve the situation yourself)
  3. Sarah thinks they cannot resolve the situation without assistance. Bethany agrees. Sarah asks the Workplace Mediator, Cassie, to help them.
  4. Cassie conducts a facilitated discussion with Bethany and Sarah and helps them to work through their issues with each other.

The costs to the business are about $1000 and the situation is resolved. The fire has been put out.


Helen Collins works in a variety of dispute resolution modes including mediation, coaching, facilitation and training. She assists businesses to increase productivity by managing workplace conflict.


Photo © Aniram



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