The leaky bottom line: The hidden cost of conflict in the workplace

Aug 22, 2022

Image of a jar with money inside.

Human conflict happens in any situation where facts, desires or fears push or pull participants against each other or in divergent directions. Conflict can be unpredictable and is inherently part of what happens when you have multiple people interacting at any given time, especially in the workplace.

Human relations in the workplace are a major part of what makes a business work. Workplace conflict can happen unbeknownst to the boss and upper management, and it can run its course until it indirectly affects a system in the business.

Sometimes, if lucky, indicators of issues among personnel can be experienced at the earliest stage of the situation, showing up as conflict that can get out of control, be unbearable to parties involved, and can no longer be ignored. This is when organizations have an opportunity to identify what to do when the damage to the organization is still preventable.

Let’s clarify that not all conflict is bad. Some conflict can actually be a source of energy that fosters creative and resourceful problem solving. Unmanaged conflict, however, can have detrimental effects on the overall net earnings of an organization.

How costly is negative conflict if not detected in time?

Conflict among co-workers and leaders in an organization can lead to a leaking bottom line. A 2008 study by the CPP Global Human Capital Report found that U.S. employees spent 2.8 hours per week dealing with conflict. This amounts to approximately $359 billion in paid hours (based on average hourly earnings of $17.95), or the equivalent of 385 million working days. This and many other statistics represent a serious skills gap among the workforce.

Many people do not know how to deal with conflict effectively. They also have not paid any attention to how they handle conflict. Competency in handling conflict is not usually taught in the educational system. Therefore, individuals mimic what they have learned throughout their lives from people they have observed handling conflict.

Unfortunately, these role models — parents, teachers, relatives or even TV — are not positive role models. For example, reality shows on television have the highest ratings, and most of what the actors do is fight, creating lose-lose, lose-win or win-lose situations. Talk about the blind leading the blind.

Employees using limited skills when dealing with conflict are dangerous to an organization. Organizations with positive cultures tend to succeed in any economy because employees exhibit high morale and loyalty.

A proactive and smart step for any organization would be to name a line item in the budget that addresses the preventive approach to human conflict. A company that increases its net earnings and reduces its costs is said to be “improving its bottom line.” Therefore, what would be the most cost-effective way to mitigate the negative effects of human conflict?

Blog Written by:Yvette Durazo

Yvette is an international leader and expert in the field of alternative dispute resolution/conflict resolution with expertise in the Human Resources, family businesses, corporate and non-profit organizational disputes areas. Yvette is an Adjunct Professor for the University of California, Santa Cruz Silicon Valley Extension for the Human Resource Management Certification Program. There she teaches online and in-person courses in Diversity, Equity, and Inclusion (DEI), Human Resource Management Courses, Communication & Conflict Management, Alternative Dispute Resolution, Ethics, Neutrality, Conciliation, and Mediation. She is also a former Adjunct Professor for the National University and the School General Council of the Judiciary in the State of Guanajuato, Mexico.