Acas has published a new report containing research on the estimated cost of workplace conflict in the UK and it makes startling reading – Estimating the costs of workplace conflict. Acas has described the research as “a landmark event and hopefully one that will really ignite the debate about taking conflict more seriously”. Conflict is an issue at every level within a business from Boards and shareholders right down to the shop floor. The research has sought to take a systematic approach to analysing the incidence and estimating the cost of workplace conflict across UK organisations of all sorts.
The key statistics are truly attention-grabbing. The overall cost of conflict to UK organisations is estimated to be almost £30 billion. When averaged across the whole workforce, that amounts to more than £1,000 per employee. The figures show that almost 10 million people experienced some form of conflict at work. More than 50% of workers reported suffering stress, anxiety or depression related to workplace conflict and almost 900,000 have taken time off work because of conflict and nearly 500,000 people resigned.
The cost of recruiting replacement employees who have resigned or been dismissed as the result of conflict is estimated to be £2.6 billion each year and the cost to employers of lost output as new employees ‘get up to speed’ is estimated to be about £12.2 billion. The employees who take sickness absence each year because of workplace conflict are estimated to cost their employers a further £2.2 billion.
The lack of a general culture in which conflict is managed appropriately is also apparent from the research. Approximately 20% of employees report taking no action at all in response to the conflict in which they have become involved. Only about 25% of employees discuss the issue with the other person(s) involved in the conflict. Just over 50% of employees raise the workplace conflict issue with their manager, HR or their union representative. The average costs of conflict where employees did not engage with their managers, HR or union representatives were higher than where such discussions took place. Moreover, where conflict spiralled into more formal procedures, costs were more than 3 times the costs associated with informal resolution.
Anyone who takes a close interest in workplace conflict understands the importance of acting early to deal with workplace conflict. The benefits of acting early are not limited to saving substantial direct cost. Resolving conflicts quickly and effectively brings with it a raft of other benefits such as improved wellbeing and staff morale, better engagement, better staff retention, improved productivity and ultimately improved profitability. The creation of a workplace environment where people feel able to raise issues and feel heard can also lead to process improvements and innovation
The research reveals that although almost three-quarters (74%) of all employees who participated in workplace mediation reported that their conflict had been wholly or largely resolved, mediation is significantly underused. Only about 5% of employees reported having taken part in some form of workplace mediation, whether internally or externally provided.
The impact of Covid-19 and the disruption it has already caused to the workplace as well as the uncertainty and further upheaval that is likely to result as we navigate our way towards the ‘new normal’, is likely to lead to situations where existing workplace conflicts will be exacerbated or new areas of conflict will arise.
There are a number of key issues which we have identified from this report:
- Workplace conflict is very very expensive and the true costs are not well understood.
- Early intervention in workplace conflict is critical to achieving good outcomes.
- Reliance on formal procedures such as grievance, disciplinary, performance management or sickness absence management is not effective and results in more resignations, dismissals or long-term sickness absences.
- Workplace mediation is an effective tool and there is massive scope to increase its use.
- Good conflict management processes are fundamental to the effective performance of an organisation.
- All staff, but especially all managers, need to be equipped with core skills to enable them engage with and manage conflict better.
- Employers need to focus more heavily on repairing broken or breaking workplace relationships.
- Investment in effective and early resolution processes designed to build positive employment relationships may have a very significant return.
- Not all conflict is bad – it is the way that it is managed that is important. When managed well, conflict can lead to creativity and innovation.
- There is a strong case for policy to focus less on legal compliance and the effectiveness of the Employment Tribunal system and more on the resolution of conflict within organisations.
A few years ago, we published an article on the unassailable business case for workplace mediation which suggested that cutting the cost of workplace conflict by increasing the use of workplace mediation was possibly the ripest area for cutting overhead costs related to labour. That suggestion seems to be borne out very strongly by this latest report and the research upon which it is based.