The Real Cost of Workplace Conflict

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Entrepreneur.com
Monday, June 21, 2010; 12:00 AM

When Rory Rowland, then CEO of a small financial institution, encountered a petty workplace conflict between two of his employees--"I don't even remember what it was about, but it was over an insignificant matter, like the way one of them looked at the other"--he didn't immediately address the problem.

That turned out to be a big mistake. "It escalated to the point where they were snarling at each other. They weren't professional at all. They would just fling [stuff] at each other's work area." This might be funny when it's on a sitcom, but not when it's happening in your business.

While every small-business owner knows that such workplace conflicts affect productivity and morale, the hard money drain of office drama is not as obvious. When CPP Inc.--publishers of the Myers-Briggs Assessment and the Thomas-Kilmann Conflict Mode Instrument--commissioned astudy on workplace conflict,they found that in 2008, 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.

That's a lot of time spent gossiping, protecting turf, retaliating, recruiting people to one side or the other, planning defenses and navigating the drama. More importantly, that's time not spent answering customer questions, filling orders or doing the job employees were hired to do.

"It was impacting the entire organization," Rowland says of the conflict at his company. "People had to navigate around them. I found out later that the two employees were recruiting people to take their sides."

Even customers took notice and complained to Rowland. "They said, 'You have some snarky employees.' If you're [angry], it's tough to be all smiles. We didn't lose customers, but it impacted our image, and I hated that."

Now a speaker and consultant for financial institutions and the author ofMy Best Boss Ever,Rowland says the most important thing in dealing with workplace conflict is to "recognize that ripping the bandage off is painful, but after it's done everything is all better."

How did Rowland rip off the bandage? "I had the two employees come in and put it on the table. I told them we weren't going to quit until the issue was resolved. One of the techniques I used was you couldn't restate your own position until you stated the other person's position to their approval. When you're angry and hurt, the last thing you want to do is restate the other person's perspective." This forced both employees to step out of their own complaints and look at the other side.

The meeting took several hours, and afterward the two changed their ways. "They said they would rather be polite than go back to what they called 'the chamber' again," Rowland says. Neither was fired, and both continued with the company for the long term.

For Rowland, the cost wasn't in just the actual number of hours it took to solve the problem and in the negative effect it had on the workplace and on customers. "I wasted a tremendous amount of time hoping it would go away; I was wrong."

Conflict Is CostlyFindings from the CPP study should be enough to spur any "wait and see" business owner into action. For example, 25 percent of employees said that avoiding conflict led to sickness or absence from work. Equally alarming, nearly 10 percent reported that workplace conflict led to project failure and more than one-third said that conflict resulted in someone leaving the company, either through firing or quitting. Those negatives translate into real financial losses for small businesses.

If a worker uses five sick days a year to avoid conflict, that's a direct cost of over $700 to your business (calculated using the above hourly earnings), not to mention the cost of covering the employee's missed work (e.g., overtime pay for another worker or hiring a temporary employee). Multiply that by 50 workers, or even 10, and you can immediately see the kind of money drain conflict creates.


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