This article explores the cost of internal conflict and proposes a range of cost saving remedial actions

Across the board, government departments, agencies and ombudsmen are being asked to do more with less and this begs the question “how can we achieve more efficiency?” Whilst some organisations are responding to this challenge by reducing services, another way to go is to analyse the cost of internal (ie workplace) conflict in your organisation and do something innovative to manage and prevent it.

So, what are the costs of internal conflict?  For starters, there are tangible costs, ie those costs that have actually already hit your bottom line. These include the cost of sick leave and absenteeism, the recruitment costs associated with new hire, mediation or legal fees associated with conflict resolution, fees paid to workplace investigators, the cost of EAP providers, counsellors, facilitators and so on. You might also need to add the cost of increased premiums for insurance policies.

Moving to the intangible costs, this is where the real pain begins. How do you assess the cost of conflict that is permeating your teams, fragmenting internal alliances and undermining the efforts of senior management? Is the organisations culture being impacted and damaged by the internal conflict and what is the cost of this? What price can you put on the damage to your corporate reputation in the marketplace and the negative impact on graduates you are seeking to recruit?

“How many customers have you lost as due to real or perceived perceptions of internal strife?”

If you start to evaluate the cost of conflict as against these criteria you may find that workplace conflict is coming at a high cost to your organisation.  Naturally, those funds could have been applied to other areas of your organisation such as learning and development, marketing and sales, staff development, training and so on.

If internal conflict is impacting on the bottom line, then what can organisations do to save these costs? How can workplace conflict be managed more cost effectively?

1.    Whilst conflict in the workplace is inevitable, and some incidence of it needs to be anticipated, managers should do what they can to prevent conflict from arising in the first place. Recruit staff who are the right cultural fit for your organisation and provide training to new and existing staff on what to do when issues arise. Prevention is also assisted by root cause analysis of workplace issues. What are the underlying root causes of conflict at work and what range of remedial actions need to be taken to prevent those causes from reoccurring? Root cause analysis is a structured process that involves forensic analysis of issues before solutions are applied.

2.    Early resolution of issues is critical. Unlike red wine, conflict does not improve with time. Issues need to be “nipped in the bud” early before they fester and get worse. Managers need to put systems in place to ensure that staff can communicate any concerns about workplace issues when they arise. Conflict resolution should be attempted by the parties themselves with the assistance of their line manager before seeking outside intervention. Managers need to know how to facilitate difficult conversations and how to manage conflict. Too often, a failure at this point results in escalation. Managers may need training on facilitating difficult workplace conversations.

3.    So many conflicts seem to arise as a result of “personality clashes” and often people seem unaware of how to interact with people with challenging or difficult personalities. Others are quick to label their co-workers as “difficult” when issues arise. Managers should offer conflict management training to staff and this should include an element on working with different personalities. Managers should welcome and encourage different personalities and understand how to bring out the best in all members of the team. The impact of positive feedback and support can not be over estimated.

4.    If external assistance is required, think carefully about the type of process that will best suit this conflict. Mediation is a process in which the participants discuss their issues with the assistance of a mediator. The mediator helps the participants to identify and understand disputed issues, develop options, consider alternatives and endeavour to reach an agreement. Mediation is a fast, private and low cost alternative to other processes such as litigation or a claim though the Fair Work Commission. However mediation will not always be appropriate and in some cases counseling or conflict coaching or workplace training is a better process option.

Internal conflict has the potential to wreak havoc on teams and destabilise workplaces. Early detection and resolution is critical as are strategies to prevent workplace conflict in the first place. It is beyond doubt that attention to these matters can impact positively on the bottom line.